Rethinking Legacy Leadership in LBM: A Conversation with Bryan Mellick of Ward Lumber

Tony M (00:00)
Thank you for joining our latest episode of Hire Smarter with Tony Missouri. I’m super excited to have Brian Malek as our guest today. ⁓ Brian, welcome so much for joining us. I really, really appreciate it. I’m excited to cover the material that we’ve outlined.

Bryan (00:12)
Thanks, Tony. is an honor, and I look forward to it.

Tony M (00:15)
Brian, you and I first met back in the Hatch and Bailey days, right? Give us an outline of that business.

Bryan (00:24)
That’s right. Geez, Hatch and Bailey was an 1872 company that I took over as president and CEO right before the Great Recession.

Tony M (00:33)
wait, wait, wait, you said 1872?

Bryan (00:36)
Yeah. Yes. This is the, in fact, Ward Lumber is my third 1800s company. Wow.

Tony M (00:41)
That’s just hard to believe. Oh my gosh, 1872.

Bryan (00:44)
And so there’s a little pre-story with that is I worked for the Galt family companies in Westport, Connecticut as the first non-family executive and helped Sam Galt, who is a fifth generation owner and young president. Coming from consulting, I was able to help him with numerous projects and that’s what led me from the oil and HVAC

and Mason Supply World into the LBM industry. we took over Hatch & Bailey and it was a company with a great balance sheet and a storied history locally. Of course, the Great Recession changed everybody’s lives and that turned into a growth project to the project of first saving the company and the biz.

and then turning it around and then designing it to improve forward into the future. That was a 10-year project. I exited ⁓ amicably in 2017 to go start my own company, which got a little bit sidetracked by the pandemic. I ended up doing management consulting again before you introduced me to Ward Lumber.

Tony M (01:58)
Well, terrific. we’ll get into Ward Lumber and it’s just a fascinating business model, great group of people and ⁓ serving the industry in upstate New York. ⁓ Before we go into that, Brian, you and I have had so many conversations about building products, supply chain businesses that ⁓ oftentimes as you’ve

I mean, you’ve lived it, Multi-generational family, predominantly patriarchal, egocentric type business models across the industry. what are some of the tenants that we see in the common, the commonalities to those, to those businesses broadly?

Bryan (02:40)
Well, I think let’s also be very fair to the to the history that many of these families have ⁓ have behind them. And so they do end up with a legacy format or operating model that we do see these days as as out of date or behind the times. But in the in the mind space of an owner operator.

they have responsibility for everything. And so in the entrepreneurial sense, they feel that they are bringing the value to the employees often, and that they’re the ones taking the risk and so deserve the return, which in a lot of ways are the basic tenants of capitalism and work. On the flip side of that is they often are probably more vulnerable than

you would want them to be, meaning ⁓ to put it crudely, do they pass the bus test? Right? Is if you were to remove the leader from the top of some of these owner operator legacy firms, would the operation be able to continue ⁓ to operate without a hitch? And the answer is largely no. So you end up with an evolution, often a very organic process where

where you have an over concentration of authority, responsibility, and in some cases, skills. The owner operators are certainly ⁓ very competent if they’ve lasted for four or five generations, even one or two generations, really. So when you enter that scenario with that kind of legacy, you have oftentimes now with Ward Lumber,

as well as a couple of my other experiences. I was the company obviously does due diligence on me, but I’m also doing due diligence on them. understanding the talent pool is critical to the decision to move into ⁓ into one of these roles. And the the talent pool at Ward was extremely rich and it had just moved to a worker co-op model.

So this provided in my mind a platform where we could go from the ⁓ more constraining elements of the legacy model, which are lack of authorities below the CEO, lack of processes, often lack of evidence-based business judgment, often very intuitive high quality business judgment.

but often inattentive to blind spots. The challenge, taking one of the legacy format into a more collaborative, agile type format that is less reliant on a single authority figure and more reliant on the idea of authority as good judgment and following business rules. I don’t have to tell you that

Of it has to follow all the safety protocols, all the things that make a yard and operation safe for customers and employees. And so that’s the challenge. And I think maybe you would find this in an &A class in our industry where you have to have a platform from which to build on. And that has been the story of

know, these three 1800s companies in my experience, two of which were directly in this industry.

Tony M (06:12)
Right. So three 1800s, know, originating organizations, that’s just that’s that’s fascinating to me. So. But if we think about it, that ⁓ the top down leadership style was effective for hundreds of years, right? And something’s changed, right? When we got to, I don’t know, the 2000s or 2020, I mean, wherever that is relatively rapidly that no longer

allows those organizations to be as successful as they were in the past. What’s changed? What are those top three really significant factors?

Bryan (06:44)
Well, I’m going to say that generationally, we’ve got a generation of leaders to omgenx. So I kind of fall into this gray area, but really the next generation of leaders is searching for a bigger picture reason to go to work than ⁓ say the baby boomers or other post-war generations like the silence. So you have a generational shift, but you’ve also got technology.

coming in at a level where information is taken for granted, often to the negative, ⁓ with negative side effects for people who are making decisions. But the social media landscape that has proliferated since, I don’t know, 2008 and the iPhone ⁓ has made people even more interested in having a say.

People believe they can be influencers. People believe they should have influence at work. Now, I would say you’ve got ⁓ technology, ⁓ generational change, and

probably ⁓ in a philosophy around business that has changed, the Baby Boomers were the generation that came from the greatest generation which fought World War II. And a lot of those top-down structures came from not just the old assembly line, Ford kind of originated structures, but came from a military structure where it was best to

follow orders and you were rewarded for being a doer. I think the philosophy has changed in a service economy and let’s face it, we’re in a service business even though we move tonnage every year. ⁓ That service mindset really prioritizes in some ways thinking over doing. People want a purpose, they want to feel like

they can add value through thinking. We’ve got such a higher percentage of people in the workforce now who went to college or at least have some associate’s degree or exposure to higher education. And so you have a different, you have a little bit of a different attitude and some, think ⁓ you’ll recall you would call millennials entitled. And I think we’ve definitely grown out of that ⁓ sort of that kind of language.

and realize that there really is something to having purpose in your work and understanding the broader contributions that you’re making.

Tony M (09:21)
You know, this is interesting. As we set up for this, we talked about how we really wanted to bring an outline to these multi-generational organizations and leadership around that. And what you’ve really identified is ⁓ the greater challenge is the workforce and the change in their perception to things. ⁓ Really, that was artful. ⁓

Define insightful defining, you know, the lack of military experience and and the access to technology and the desire to influence one of the things that we’ve done here internally in our offices, we took a just a quick acid, you know, psych profiles test. There’s a lot of fun. And one of the things that came out is that a handful of us, you know, Gen Xers are

very action oriented. Like across the board, came out, we came out like, hey, we’re going to be, you know, making an impact, going out there, taking risks and doing it. And predominantly ⁓ all the younger generation on the team were non-action. And the difference culturally really highlighted something for all of us leaders here just at Missouri Group and Charlie and Arlen and team to really think about that. So,

The thinking versus doing. you help us GenXers understand why are we so action-oriented and aggressive and ⁓ help us understand this new generation and their more reflective approach?

Bryan (10:53)
Well, think the ⁓ I think a big part of it is Gen X saw possibility. Where not everyone else did, I think. You know, I’ve been I saw my careers now 35 years. I’m probably a little on the older side of Gen X, but professionally growing up professionally in the 90s. ⁓

and early aughts, mean, you really see a change in the world and you really understand that anything’s possible. So, you know, also if you go back to 1990, there weren’t a lot of jobs. You know, we’ve been through some pretty rough waters as a generation. And so I think the entrepreneurial spirit was somehow ⁓ infused ⁓ in our generation by

seeing what’s possible, thinking what’s possible, and that the way to do that is to put your nose down and get after it. ⁓ Just like the millennials were originally called entitled, Gen X was originally called slackers. I think both are proven to be pretty much the opposite, and that those pejoratives are probably the function of some media trend or other rather than a reflection of reality.

And so in terms of the thinking part, I think that our education system for all its flaws did teach people to value thinking as opposed to just blindly following orders. And so I think the quality of thinking is what we really need to be concerned about here is, are you thinking with the proper business judgment? Are you trained?

Or do you think you’re in a social environment where the loudest voice, squeakiest wheel, biggest opinion ⁓ comes into play? And I think that’s always a danger, even with us action-oriented, is if you’re not thinking before you’re doing, ⁓ you can ⁓ waste a lot of time. But like

Like a lot of Gen X, I kind of go by the philosophy. It’s better to ⁓ make a decision than not make a decision and get ⁓ stuck in some analysis paralysis. ⁓

Tony M (13:16)
In that void, that indecision creates a vacuum. And I don’t know, from my perspective, if you have decisive action and the team is moving forward, it eliminates that vacuum pulling in something that is undesirable. So while the decision might not be 100 % perfect, ⁓ you certainly can make another tweak along the way to guide that path. ⁓

That’s been my approach. let’s, you touched on something that I don’t think our group, because it took me a little bit when we were first introduced with the war lumber situation to like comprehend this. ⁓ So there’s ESOP organizations and then there’s co-op organizations. Can you please go through and explain to everybody the significant differences between.

Bryan (14:09)
I’ve become somewhat of an expert on co-ops. To me, there’s almost no comparison. The ESOP ⁓ has a path to ownership with a very constrained ⁓ process in how you earn shares and how you can eventually liquidate shares. And so it’s a very focused

process, it’s got a lot of precedent with bigger companies from the standpoint of the tax implications and the legal structure. So you have a long-term view from the ESOP if you are earning something into a retirement account. The co-op structure is much simpler and in some ways maybe a little unwieldy, but what I think it does and what we’re

we’re doing now, I think is it gives you the opportunity to align incentives in a way from the members, from the front line, brand new yard guy to the CFO. And that’s been a real strength of the co-op model. And so let me describe it real, real quickly here. You have the opportunity to buy in over a certain amount of time.

at a reasonable price. And so for us, it’s been six months is the timeframe. And that has been really helpful to get buy-in and a surge in membership. So we have something like 75 % of the employees are members. And that’s, I would think is maybe a typical strategy starting up a co-op. It really solidifies the new structure.

the members now all own one share equivalent of the business. And they vote in the board of directors that is chosen from the membership. And then each year, the board of directors gets to vote on what share of the profits, if any, get distributed in a form of dividends. It’s called patronage, but ⁓ it’s essentially a cash dividend.

that’s paid out. And this structure is a way to fast track a lot of business concepts, the concepts of ownership, the concepts of a balance sheet versus an income statement, the concept of financial statements at all, and the concept of how you make decisions that have a return on investment. I think more importantly, it

is a motivator to understand the principles of what it means to be on your team. ⁓ in our case, we follow very carefully, of course, the bylaws and a decision matrix, but we have a mission and value statement that ⁓ we hold up as our sort of North Star. Now, underneath that, we have, since I’ve gotten there, we…

I had the front line to work with their managers and develop a set of operating principles, which is more like, hey, do we expect everybody to show up on time every day? Yes. Do we expect honesty and integrity? Yes. Do we expect people to work hard and follow instructions? Yes. These basic tenants that align with our mission values. We’ve been able to grassroots,

through grassroots effort develop a way to hold each other accountable that you’re just not going to see adopted in a regular company where the employees really don’t necessarily have skin in the game. And so this has been while also a huge challenge, this has been a structure, a legal structure that I’ve been able to utilize to

really truly align the organization to value.

Tony M (18:11)
Wow, that’s fantastic. Are there similar tax advantages to a co-op operation like an ESOP?

Bryan (18:18)
There are some, it’s, I mean, you get different set of taxes on, different set of tax rules apply to your dividend, so you’re taxed less. Okay. Yeah.

And there are, it’s a legal structure that’s recognized in the tax code and so forth. So there are other advantages. ⁓ There’s a whole ecosystem of finance companies, consultants and so forth that are all very pro-coop and worker-owned cooperative has a element of democratic leadership slash ownership.

I think it’s been proven in very small companies that are organized around a similar or adjacent product line such as a farmer’s market or something like that, a food co-op for instance. And I think at the larger level, works well with basically replacing a partnership. So I don’t know, if we were in an engineering firm together, you and I, it could be a partnership or it could be a co-op.

It’s been very effective at scale for that business. But to my knowledge, this is the only co-op in the LBM industry. And there aren’t many in super highly competitive industries. So I would just give a shout out to the competitive nature of this industry. it may be the last mile for building materials, maybe one of the most competitive ⁓ businesses in the country, honestly.

So this is unique situation, especially for a 20, 30, 40 million dollar size company.

Tony M (19:56)
Yeah, yes.

As we talk about, you know, taking organizations through this significant cultural leadership change from a top-down management structure to a broader empowered team approach, one of the comments that you made is that, you know, the smaller the enterprise, the greater the constraints. But those constraints provide even greater opportunity to leverage. Help me understand that.

Bryan (20:24)
Well, so I think people often say, you know, that you have to think outside the box to be creative. And the reality most of us live in is that we live inside a box. And honestly, it’s really saying that necessity is the mother of invention. That’s really what I’m trying to get at. And so you’re in the constraints that the ⁓

you know, the small medium enterprise in the United States has is access to capital, access to talent, ⁓ access to ⁓ third party resources. The constraints, the laundry list of constraints are innumerable in many ways. And that’s, yeah, the beauty of whether it’s family owned businesses,

pure startups ⁓ or owner operated businesses in general is that they have, they’re responsible, I think for almost 50 % of payroll and employment in the country. And it’s something that’s not necessarily talked about, but if you’re in one of these situations, whether you’re an employee, an owner, operator,

⁓ or a worker owner such as our co-op has, you’ve got just a limited set of choices in order to serve the customer as best as possible. so really it becomes, when I say that the constraints provide ⁓ a forcing function for innovation, I guess it’s almost as simple as if your employees are getting a little bit better every day.

If they understand that learning and improving are part of the goal set, then they go from worker owners to worker entrepreneurs. And if they can maintain that, I mean, think about just what a half a percent ⁓ of learning and organizational capability does compounded over a year. That can result in all kinds of efficiencies, not just top line,

but in terms of OpEx, CapEx, and of course in our industry, know, gross profit margin.

Tony M (22:45)
Help me understand the roots of the bias for control and how the bias for action becomes a real solution in driving the empowered culture that you’re heading towards.

Bryan (22:56)
as you pointed out, you know, a lot of owner operators, whatever their generation, but some that we’re familiar with, you know, clearly began with a bias towards action. And at some point, however, you’ll find a lot of the growth potential slowing because the owner seeks control more than they seek basically more growth. And

there’s an inflection point there. And I think in the tech world, for instance, a startup will have a founder and they get to that inflection point and immediately their investors say, okay, now it’s time to hire a professional manager. So not that an owner operator isn’t a professional manager, one human being has only so much capacity, right? They can, know, one person maybe can run.

a $40 million company, one maybe can run a $10 million company. The complexity of the operation is so often held in the mind of that single operator that that becomes a liability to growth. And so then it becomes about control because you’ve built a business that has seen success, has cashflow that you now fully depend on.

and maybe you’re further along in your career, your bias is for control. And you also may or may not have employees with skin in the game. So your employees are, do they wanna work harder for the same wage? Probably not. And so if you’ve got, ⁓ you wanna control the ⁓ forward momentum, and so that becomes a little oxymoronic because…

Forward momentum and taking action often needs to be bold. And yes, it needs to be ⁓ thought out to a certain degree so you understand the level of risk you’re taking. But to have a controlled forward momentum can be, again, with the bias for control on your forward momentum, you’re gonna slow your progress or reduce it dramatically to the point of, yeah, there’s a better opportunity cost to have a bias for action.

Tony M (25:07)
So Brian, this is really important. And I know you’ve had significant experiences in your background taking on these challenges of inheriting a team that is not used to the level of empowerment that you’re trying to build the culture towards, or specifically the bias for action. What are the nuanced steps to nurturing individuals that have not had that level of authority to feel confident in being more aggressive

and just in being more autonomous in taking action in the roles that impact the organization.

Bryan (25:41)
How do do it? it’s a coaching exercise ⁓ in some respects. If you are ⁓ if you’re the coach on the sideline, you’ve got to be able to see the whole field. You have to be able to see how the players interact. You have to understand the players capabilities and their their weaknesses, but also what their potential is. And so I think the nuance is

Identify, well, let’s take structure out of it for a minute because I think if we’re really talking culture and we’re talking the operating model, structure should follow that. Who reports to who and so forth should follow that. So to organize to value, I would say in our industry, your top line, which includes gross margin percentage and your GP dollars, ⁓ your top line is critical.

And so if you don’t have a central line to that function, ⁓ then you want to find the strengths within the player set that you have. So as a coach, you say, okay, well, these two folks are exceptional at thinking about product and thinking about sales and working with the sales group. So let’s just move their focus to their strengths.

I will just ignore their weaknesses for the time being as long as they’re not disruptive and hopefully never have to ⁓ spend that much time on them. I think that’s something I can provide that is an invitation to people to excel if they, now they have to trust up. Okay, so you have ⁓ employees who will say, well, geez, you won’t empower me, you don’t trust me.

And my, this is the same response I gave to my son when he got his first phone and I told him I was monitoring it. He said, you don’t trust me. said, no, you, it’s you who don’t trust me. And so I, you know, I try to be open and honest. I can be a little direct, not always the best at all these different types of communication, but I do believe that I have

all my people’s best interest at heart, including their career path. And their career path is not gonna be developed if I focus on their weaknesses. So I would say that’s the number, that’s one of the number one nuances. And then also is what are the key functions? If you don’t have a direct line into the key functions, you know, which operations and sales.

and then certain categories within those because the customer experience has to improve every single day. Anything that we’re good at, we just want to get better at. We want to improve the customer experience. We also want to make sure that we take some risks in order to improve it. And if we fail, we got to recover fast.

I’m humbled to be in this industry and the company of people who know these things inside and out, because they’ve lived them day to day. I try to sort of stand on the shoulders of some of the people I’ve learned from in this industry. And that’s a huge thing, is to be able to recover quickly, be humble, be able to set your ego aside and serve the customer. Now, product selection.

strategic initiatives, cost control, ⁓ &A, potential growth in many different areas. The strategy comes differently for each company, but if you don’t have your functional strength in a couple of the key areas, sales, product, operations, then you’re already behind the eight ball.

Tony M (29:29)
And your whole philosophy, and I’m just going to sum it up here, do not line up, please poke holes and just let me know where I’m missing. But it seems like humans really in the right environments, they want to collaborate, they want to compete, and they want to have some control over their career development ⁓ growth and what that looks like. are those pretty strong tenants to your philosophy?

Bryan (29:53)
Yeah, I couldn’t say it better myself, maybe.

Tony M (29:56)
And as an organization, or I should say as a, an industry, oftentimes we struggle meeting those three ⁓ tenants, right? Although those three situations in, in the cultural or the operating nuances to, the organization. Why is that? Cause it seems pretty simple.

Bryan (30:19)
Well, again, we’ll get back to constraints. If you have a team that can tackle multiple problems at one time, then you’re probably okay. I think one of the answers lies in the legacy function where the owner operator is taking one problem at a time and taking ownership of all of it and they’re missing opportunities.

And so you’re reliant on key personnel, for instance, and then one of them leaves. So it’s two steps back. I don’t know if any of your listeners are athletes. I’m still barely an athlete at my age, but at my age, you get a little shoulder issue and that can feel really, really devastating.

It is such a setback. It’s months at a time and that is something you have to work slowly through Well, that’s how you handle a shoulder situation. That’s it’s not how you can handle an organization ⁓ so I mean, I’ll just give props to to the to Jay Ward and the fourth generation owner who who sold the business his company and business to the employees and developed the ⁓

the process as well as the sale. And so we have third parties who helped design the co-op. Each co-op has unique bylaws. These things were all ⁓ taken by the steering committee of employees to work with attorneys and third party consultants, both management co-op type consultants and finance consultants. And so…

You know, this process of moving a multi-generational business into this co-op format in its own way was ⁓ clearly it was a way for him to ⁓ at the right time for him and his family to exit the business, but also to ⁓ provide a platform for the team that he had built over the years. And, you know, when I met the hiring committee,

I was blown away by the professionalism and the deep talent pool in the company. So from my standpoint, I had just ⁓ a huge ⁓ reservoir of ⁓ opportunity with the organization. So when you can recognize that, you can have a higher degree of confidence in

bringing out the collaborative, agile ⁓ type of team of team approaches ⁓ to running the organization. ⁓ And that’s not always the case. mean, for instance, this company had a CFO and not every company our size has a CFO. And that we also had a chief technology officer. And so we had some things in place structurally.

that gave a big advantage. And so back to why we have a hard time with this. Well, when you have a CFO, that means someone is solving real problems, whether they are operations, whether they’re the key functional problems or not, they have to do with paying taxes, dealing with the bank, making sure your inventory’s ⁓ squared away, making sure your ERP processes are right, et cetera, et cetera.

That’s a whole problem set that the CEO doesn’t have to worry about on a day-to-day basis. yes, so I hope I answered the question. I think there’s probably a lot more there we could talk about for a while.

Tony M (34:19)
No, I thought that was excellent. And as you mentioned, Jay did develop some really nice talent, tracks solid character individuals to the organization, super proud of them and the team and what collectively they’ve kind of developed the organization into. It’s really exciting and a model for any LBM organization out there to really take a look at and review.

You mentioned the CFO element to this and I’m just, know, certainly that comes to the financials and the math, which those bring just a really strong evidence-based approach to whatever the business is doing, right? I mean, it’s the ultimate scoreboard, so to speak, right? Being a team and evolving them to be a more evidence-based ⁓ organization as they make their decisions and to bring that financial transparency

Bryan (35:00)
it.

Tony M (35:11)
Are there some key steps to move through? Because oftentimes what I see in a lot of these ⁓ family health organizations is they really refrain from having an open P &L, open balance sheet approach. I guess, take us through that. do you take an organization through those steps?

Bryan (35:31)
Well, it’s interesting because I’ve seen it done a couple of different ways where it’s very closely held. I’ve also, even with the first family owned company, Sam Galt was kind of an enlightened leader and he was pretty open book and sharing the financials and in addition to

other elements of how we treated employees had profit sharing. So he had understood that there was an alignment with people who had skin in the game. And so I learned a lot from him. And then with Ward, the fact is that OpenBook is part of the co-op sort of standard model. So this was well developed.

by the time I arrived in terms of the familiarity, if not understanding the familiarity with why we do what we do to some degree, each person knowing how their job affects the bottom line. The simplest example in our industry is probably inventory. I don’t know, you tell me it’s probably sheetrock or something where

you just, the certain items you just get damaged and it’s very easily, very easy to show the value situation to any employee. But when it comes to making evidence-based decisions on how do you look at the ROI for a certain project? Should we get this John Deere loader or this forklift? Those are much more nuanced, but ultimately there’s an economic

rationale behind the decision. And I find the biggest obstacle is people not understanding trade-offs. So you might have people in an organization who have an idea and they’re vying for the attention of the owner and they take a hard position on their idea. Their idea is the one that they ⁓ seeking and they seek to win that sort of

that’s in that arena of who’s going to get the attention of the owner and then therefore get the resources. I would say if you understand that there are trade-offs and you put in place a couple of small processes, it becomes much more about the process than about the people and their relative position and getting the attention. For instance, we have a real solid ⁓ operational level controller.

okay, who ⁓ I brought on and when works for the CFO. Well, she can very easily meet with the operating manager or the sales or product manager and put together an outline of what the project is and why it makes or doesn’t make economic sense or under what circumstances it does.

This is a forced collaboration in a sense, is that in order to get approval, you need to talk to me about the idea. And as soon as I sign off on the idea, it goes to the second phase, which is to ⁓ come up with what the rationale is and what the outline of a plan. And if the plan’s a good one, then it can go forward.

So it’s really being open in our intentions without really trying to hoard or otherwise ⁓ try to out-compete each other for resources. ⁓ When ultimately, like we’ve said, there are finite resources. We live in constraints. We can only buy so many trucks in a year and so forth.

Tony M (39:22)
Trade-offs. I love it. That’s fantastic. And specifically project-based accounting or customer-based accounting. If you had, I mean, think of the organizations out there that have never even thought of taking this type of accounting approach. What would the changes, how would they evolve their business? How would those decisions change if they really did project-based accounting?

Bryan (39:51)
Well, I think, again, it comes back to organizing to value. So you’d have to go on the operating assumption that if a middle manager is turned into a business leader, that they will be able to drop decisions down a level. And so you have a competency closer to the front line, say, going to a trade show.

selecting new products for the year, when we’re all traveling in the beginning of the year for new product ideas and so forth. If you have a process that can do that, there is an underlying assumption is that the managers above that are not just managers, but leaders, and then all the way to the top, and that there is greater value those leaders can have. ⁓

the flip side is if the front line can make the decision, you may make obsolete a layer of management. That’s often a very different difficult thing people can conceptualize. So organizational design ⁓ also has huge cultural impacts. So there may be some hidden.

hidden challenges that people intuitively shy away from, makes that people shy away from ⁓ taking some of those big steps. But I would like to think that ultimately the leader at the top can always add to if their employees are taking tasks, have learned to take higher level tasks off their plate, then they can continue to focus on ⁓ the highest level of value, which could be building the organization. ⁓

as much as building the business.

Tony M (41:43)
Two areas that I see for any leader out there that’s looking to identify opportunities to improve their profits within their organization. ⁓ One is purchasing. ⁓ Really common. ⁓ Owner operators, they want to do their own purchasing. Why? Well, because there’s no transparency as to how good they are at it. They can go and tell everyone that they’re great buyers and that they predict the market. They’re an oracle. And as long as there’s inventory on the ground,

Nobody really knows what exactly the ⁓ gimroy is that they’re generating from those purchasing decisions. And by the way, what a great situation. I’ve got all the vendors tell me how great I am, which continues to create this kind of egocentric ego feed. The other one that I see is owners will ⁓ decide that they’re going to sell and project manage some massive multifamily project that is

seven times out of 10, a red project, right? It’s not profitable, but they get the attention of having the big project, big 300, 500 unit multifamily, whatever it is, whatever it may be. So when they go and get their coffee in the morning, they can feel good about themselves when the whole time it’s a drain on the business model. are two things that I, it’s super common. And it’s like, it’s,

I don’t know, it’s it’s fascinating to me what the power of a lack of transparency will do in driving really bad decisions.

Bryan (43:22)
Yeah, I I’m going to I’m going to go ahead and defend those legacy owners who do that in one sense anyway, which is they’re probably playing to their own strengths. And while they they may not always be able to do that with their team, ⁓ ultimately, you’re right in this industry, selling capability is one of the reasons that you get to the top or one of the strengths that ⁓

that has your business succeed. And then on the purchasing side, like it’s your money, your gambling. You wanna play the commodities markets in some way, that’s you, you’re doing it. And it does give you ⁓ outward facing cred. And a lot of your identity ⁓ is connected with how you interact ⁓ outside the company. again, this is, ⁓ the positive side of those traits are

That’s how you’re involved in the local community. That’s how you develop relationships with vendors. So they’re there for you when supply chain issues happen and so forth. ⁓ I think that if you want to grow the business and you want to reduce business risk, then you would do well looking, maybe even spending more time looking into the company than outside the company. But you’re right, the owner operator

takes on the ownership of those projects or those functions. Right now, I have to say we’ve got an outstanding purchasing department, which ⁓ in fact, Jay Ward is still a big part of. So he’s not retired yet. He’s still working for the company and contributing greatly. ⁓

The idea that they as an owner operator are going to win by taking a functional role, I think ⁓ can happen. But I would say that that’s better to happen in a crisis. think ⁓ you need a real benevolent dictator ⁓ in times of crisis. And that could be the Great Recession, that could be the pandemic. Those are times where you do need

a very fast decision-making process, somewhat of an autocratic decision-making process. And so you don’t want your organization to lose that capability should the stuff hit the fan. However, if you want to evolve your organization into a machine that will grow itself so you can spend more time fishing or with your grandkids or on the golf course,

or doing a new business venture, then I would say, focus inward.

Tony M (46:19)
You know, that was a fascinating part of what you shared in that to grow the organization, right, and to retain the talent and for the organization to be in a much more aggressive, innovative pace, ⁓ this cultural ⁓ empowered direction is what’s needed. And you and I were talking, too, prior to the setup, just regarding the investment in people ⁓ and what that takes. And in Capital Two, as you kind of make your future

plans as the organization continues to grow. I was fascinated by the fact that the autocratic structure still needs to be in the background.

So I guess the question is.

How do organizations maintain that, but yet still not pull the trigger too quick, if you know what saying, or fulfill their roles in the best interest of the organization? Does that, I mean, does that take a smart board? Does that take a smart, like, or just a really self-aware leader? Like, how is it done?

Bryan (47:24)
Well, I think if we go back to those two, there are others. But in terms of our industry, I think the pandemic and Great Recession are, I think you find out a little bit what you’re made of in the process. And so intuitively, people will know that this is the time to take action.

in order to because you have to have courage under fire. mean, it is, you know, I’ll never forget, you know, we brought the team together in the Great Recession and we decided to all take a 20 % pay cut and ⁓ for a year in order to ⁓ push through the toughest time. And that allowed us to keep the team intact and to make a decision quickly.

And quite frankly, it allowed us to actually acquire customers and build the team in a time where other people were down 60, 70%. And I think we only went down at the time 30 or 40%. And so we also lucked out at that point in time because we had no debt. so I believe we, I would love to meet the other companies in our industry if they’re

or any who managed through the Great Recession without taking on any new financing, either debt or equity, because that ⁓ was a difficult time. So to answer your question, I think ⁓ a good board and just a good set of operators, a good set of operators who knows their roster and knows their team and knows the economics.

Oftentimes you see the writing on the wall and that that’s really the ability to see around the corner is the one that makes you prepared ⁓ for dealing with those issues.

Tony M (49:17)
Brian, as you identified the industry, the LBM space, the dealers, the last mile, so to speak, to the job site, to the construction site is incredibly, incredibly competitive.

What does the agenda look like for Ward Lumber? What are the competitive repositioning that you’re taking the organization through to be able to hit these significant improvements in growth and revenue as you look to the future?

Bryan (49:44)
I I hinted at this before, actually, I think I didn’t hint, I said it outright, is we’re just going to get better at doing what we do. Now, a lot of what we do from the standpoint of servicing customers, providing a good customer experience can be built upon. We have better ⁓ approach to hiring, I believe, than we did when I started. We have ⁓

We have the added incentive of potential membership and of membership for new hires and existing people respectively. So there is once they feel the ownership and it is kind of an embodied feeling that if we improve a little bit every day that that will compound. Now, I think that there are opportunities to partner

with like-minded owners who maybe ⁓ want to sell their business. And so I won’t go into any details there, but that’s certainly an opportunity in our region, which ⁓ is in the North country, Northern New York, in the Adirondack Mountains. So while there are big kind of growth opportunities that we wanna look at, ⁓ the real magic is just being

playing to our strengths, being better. And then if we do that, then you have to be confident, 100 % confident that opportunities will continue to present themselves.

Tony M (51:17)
And is there a value proposition that goes beyond ⁓ supply into manufacturing and install that’s part of your vision going forward? And you don’t have to give up the secret code, right? I’m just curious, because as an organization, Ward Lumber was not doing any later installation or manufacturing. Is that accurate?

Bryan (51:39)
Correct now in a prior life, ⁓ the Ward lumber company was ⁓ part of a greater Ward ⁓ company family company that included a mill. And so there is a pine mill across the street ⁓ from us, which is not ours. So in a way that has that is fulfilled while not manufacturing the milling process being adjacent to the company gives us some opportunities.

But I think that’s a really interesting question. I would say that install where we are ⁓ is something that’s very, very heavily owned by the contractor. I see that there are ⁓ at least two opportunities though for us where there are product category growth that we aren’t directly involved in and could be.

So I think that’s a very interesting opportunity. ⁓ you know, install, I feel like you have to really own the install process from soup to nuts. And if that kind of level of is too HR intensive, ⁓ it could be difficult to manage successfully. But if that can fall into one of your core competencies and capabilities of your current staff, then I think you can

⁓ You can build it up from the grass roots and at least have a shot at

Tony M (53:05)
My thoughts on install. Yeah, I think it creates a incredible competitive edge is the turnover rates on job site labor. You know, just are a tremendous challenge for the industry. To your point, certainly the HR elements of the retention of that talent, certainly a key. And then the other is ⁓ certainly whip accounting. Whoever’s running the install business needs to be an expert at really staying on top of their whip.

day to day, week to week, month to month. Brian, this is excellent. This is terrific. ⁓ You know, I guess I’ve since I’ve known you, I’ve really been envious of your of your William & Mary experience. My first time on the campus, I was like, my God, if only I had known, right? What a wonderful place and then Richmond too. I’m sorry, my history buff, right? So yeah, for you to have gone to Richmond and William & Mary is like, wow.

You’re living, you lived my dream. So that’s awesome.

Bryan (53:58)
Well, my son’s now at Virginia Tech, so somehow the Virginia theme has been kept alive. ⁓ Right now, I’m hoping to fly down and ⁓ maybe drive back with him ahead of the Thanksgiving break so I can finally get a minute to myself with him. Yeah, I appreciate that.

Tony M (54:18)
will soak it up, particularly with his entrepreneurial degree and Greek leadership on campus. It sounds like a chip off the old block. ⁓ hopefully we can pull him into the billing industry. So at some point in time, please make an introduction and I’ll do my best representing our industry to attract another great leader.

Bryan (54:39)
Thanks a lot, Tony. Will do.

Tony M (54:40)
Excellent. Thank you so much.