January 20, 2020

Who will be the next Builders FirstSource CEO?

The press release dated January 13, 2020 announced Builders FirstSource has launched a search to replace Chad Crow as CEO. https://www.hbsdealer.com/news/builders-firstsource-ceo-will-retire-in-2020/

Chad has done well. As of March of 2019, the Fortune 500 had BFS listed at #394 of the top 500 companies in the world. It’s pretty cool to see a dealer from our industry segment flanked by legacy companies like Hershey at #391 and Weyerhaeuser at #406 on the Fortune 500 listing.

Before taking the helm, Chad had the benefit of being mentored by Floyd Sherman, an empire builder. Working alongside him as CFO, then COO, was excellent preparation for being the CEO. With Floyd now at 79 years old, I’m not sure the next CEO will be offered the same opportunity. It would seem plausible COOs Scott Robins and Dave Rush would be internal candidates for the position, following the Floyd-to-Chad succession pattern. Misura Group placed Scott at Hope lumber in 2004 as a market Vice President; he has done well persistently developing his leadership skills and would seem to be well poised for the next step.

What is the right Score Card for Builders FirstSource CEO candidates?

Developing People 

Leaders that have mastered teaching, training and developing people, their people grow faster than the business demands. The excess of talent creates a more competitive environment with the best talent raising the level of performance expectations. The increase in the competition drives the profit line to new heights, an area of opportunity for BFS in the future.

Customer-centric 

Across their served market, the range of complexity of the general contractor customer base is wide with vastly different needs. Effectively serving those needs under one common business model is difficult. The competitive offering from specialists is growing, posing threats to the high profit margin product segments. Will the next leader be effective at creating new solutions to rising challenges, and be capable of not losing customer focus under intense financial performance pressure?

Continuous improvement culture 

What is the candidate’s proven history of success leveraging Hoshin Kanri? Hoshin Kanri, or “strategic deployment,” is a core executive tool developed in Japan and used by the Toyota Leadership College, its tenets commonly discussed among Fortune 500 CEOs. Many of you spent countless hours in Q4 2019 attending the year-end strategic planning meetings. It’s common for that strategic plan to be written down and never looked at again until next December. A clear sign of the executive leader’s ineffective deployment. Leading people to be consumed by the day to day tactical fray of keeping the trains on time.  Not supporting your best people to have the time, space and resources needed to gain ground on significant strategic challenges. Hoshin Kanri is a proven solution. For Fortune 500 CEOs, being deeply trained in Hoshin Kanri was equivalent to the rest of us mortals moving from arithmetic to algebra; it’s new and hard but simple in concept and a hurdle we cleared like a freshman in high school. A clear “must-have” in my book for the next BFS CEO is to have achieved success with key strategic goals through an effective deployment process – Hoshin Kanri.

As with every recruiting project, making sure everyone is aware of the possible pitfalls is critical.

NASDAQ listed, Wall Street traded, yet people and customer-centric should be the mantra. Easier said than done. The next leader should have great examples of successfully leading through a similar volatile environment while not sacrificing core values for financial achievements.

Tallest Midget Syndrome. The building product dealer space does not have many publicly-held companies, BFS and BMC Holdings. The tendency to over-value leaders from the building industry who are publicly held in the production builder or manufacturer segment under the “they know the industry” concept can be a risk. Limiting the talent pool to building products companies that are NASDAQ or NYSE traded shrinks the potential talent pool hence creating Tallest Midget Syndrome.

To the BFS Board of Directors – the people and families of BFS deserve the best and are counting on you. Serve them first, and the broader shareholders will be pleased with the results.

Hire Smarter – Tony