WINNER – Retail and Consumer Products
owner, president and CEO
Kum & Go L.C.
Growing up as the “boss’ son,” Kyle Krause knew he’d need to work 10 times harder than any other employee at Kum & Go L.C. to earn the respect of his co-workers.
So from the time he started pumping gas at the company’s ?rst convenience store — owned by his father and grandfather — Krause was constantly asking himself what he needed to do to one day take their place as an owner of the business.
As the owner, president and CEO of Kum & Go today, Krause continues to think big as he applies the lessons and coaching provided by his father and grandfather to lead the company’s expansion and growth.
His vision is to make Kum & Go the No. 1 convenience retailer in the United States by 2021.
But while he knows that expansion is critical in reaching this milestone, Krause says that the ultimate goal isn’t about being the biggest business.
It’s about being the best. That’s one of the reasons why he’s abandoned the company’s previous growth-through acquisition strategy to focus on growing through new store construction and new markets.
In 2011, Kyle unveiled his KG Vision, a 10-year plan to reach the 2021 goal, which includes rolling out new “5K” store models designed around customer convenience and needs.
To develop the new store design, Krause had three full-size mock-up stores built in a warehouse, asking select employees and customers to visit them and provide feedback on how to create the very best customer experience.
Under Krause’s leadership, Kum & Go continues to raise its standards for service and quality, driving toward the vision to be No. 1.
Currently, the company is the ?fth-largest, privately held, company-operated convenience store chain in the U.S.
HOW TO REACH: Kum & Go L.C., www.kumandgo.com
WINNER – Energy and Chemicals
Daniel Oh, president and CEO
Jeff Stroburg, chairman
Renewable Energy Group Inc.
Jeff Stroburg and Daniel Oh share a passion for the success of their company, Renewable Energy Group Inc., but they arrived at that destination from different directions.
Stroburg, the company’s chairman, grew up on a farm in Iowa and didn’t plan to become an entrepreneur. Oh, the president and CEO, grew up working in his family business, which groomed him for an entrepreneurial course from day one.
Stroburg and Oh have created a work environment in which people are exposed to many different work situations and experiences early in their careers.
This was done partly by design, but it was also necessitated by REG’s fast growth. The company has developed a workplace design that emulates its continuous-?ow biodiesel plants.
It moved department locations to help it reach its highest ef?ciency level by placing people in different departments close to each other to foster a cohesive working relationship.
Renewable Energy Group’s leaders believe a single bad hire can be detrimental to the company’s prospects for success, so they have instituted a rigorous employee on-boarding process.
Since the company’s inception six years ago, REG has supported four employees as they have worked their way through Iowa State University’s MBA program.
REG also sponsors a leadership camp that helps develop many of the company’s team leaders.
As Renewable Energy Group’s leaders looks to the future, they are contemplating entering the feedstock market.
The company currently purchases the material it uses to produce biodiesel fuels, but as it expands the types of material it can use at its plants, it is beginning to see potential bene?ts in the prospect of producing its own feedstock.
HOW TO REACH: Renewable Energy Group Inc., www.regi.com
WINNER – Master Entrepreneur
Larry Porter?eld has learned throughout his career the importance of leading by example in order to drive change.
As CEO of MidwayUSA, a catalog and Internet retailer of shooting, hunting and outdoor products, he has led his team to double-digit business growth and improved operational performance by doing exactly that.
When Potter?eld realized that the company’s operational model was not going to support the kind of business growth that he anticipated over the next decade, he suggested a new criteria called the Baldridge Criteria for Performance Excellence — an approach that includes cutting-edge leadership and management principles and technologies — to help the company scale for growth.
However, he soon realized that every attempt to implement the Baldridge approach was failing to gain traction.
It was when Potter?eld read “The Tipping Point” by Malcolm Gladwell that he realized what he needed to do to successfully transform the business.
According to Gladwell’s research, it takes just 10 percent of a group to effect massive change.
While Potter?eld knew that he needed to lead by example, what he was missing was a dedicated team that was invested in driving the operational transformation.
So with Gladwell’s lesson in mind, Potter?eld recruited 10 percent of the company’s workforce — 27 managers in all — and began educating them on the Baldridge criteria, showing them why it was an effective approach and why they should get behind it.
In 2006, Potter?eld’s strong team of supporters began advocating the new criteria across the organization, and soon, the enthusiasm was spreading.
Potter?eld’s successful leadership of the operational transformation culminated in 2009, when MidwayUSA received a national Baldridge award.
HOW TO REACH: MidwayUSA, www.midwayusa.com
WINNER - Technology
Chief Executive Of?cer and Chairman of the Board
When asked about his leadership style, NIC Inc.’s chairman and CEO, Harry Herington, explains that he prides himself on leading by example and having high expectations of those around him.
Herington makes it clear that working at NIC can be tough, and it takes individuals with a high degree of passion to be successful.
Herington believes a leader has many qualities distinct from other roles. A leader is one who can make decisive, informed decisions as he sets the tone and strategy for the company.
Herington leads in that fashion because he believes it is essential to the success of his company.
The degree of dif?culty associated with the success of both Herington and NIC is high. Not only is NIC operating in an industry that is driven by automation and technology, the company is marketing to risk-averse customers — state and local governments.
NIC creates of?cial websites, online services and secure payment processing solutions for more than 3,500 federal, state and local government agencies.
Governing bodies are often slow to innovate and slow to adapt. Yet, under Herington’s leadership, NIC has achieved a high level of success and continues to grow at an impressive rate.
Herington has met the challenges facing his company by focusing on the people his customers serve — in this case, the state and local government constituents who use NIC’s services.
In addition, NIC has found a revenue model whereby the citizens pay a processing fee for the convenience of allowing the government to self-fund the project and avoid budgeting or procurement concerns.
That is all on top of Herington’s leadership of NIC throughout the recent recession. He made the decision to aggressively invest in the company, allowing it to not only survive but also emerge stronger than ever.
HOW TO REACH: NIC Inc., www.egov.com
WINNER - Transportation
Robert Low believes that the center of Prime Inc.’s continued success over the years has been a strong management team. In assembling his team, Prime’s president looked for individuals who are talented enough to perform at a high level while still adhering to the organization’s culture.
Once he had the people he wanted, he focused on developing a work environment that would allow them to reach their full potential.
In Low’s words, the best managerial team can create both “culture and numbers.” They can promote the cultural principles of the company while producing quanti?able results.
Low’s strong management team has helped Prime to develop a strong presence in several areas of the transportation industry — including refrigerated ?atbed, tanker and logistics.
Using those core areas of strength as a base, Low intends to identify and capitalize on several growth opportunities for the company in the coming years.
Low looks forward to the opportunity to expand Prime’s customer base of shippers due to an increased focus on safety and regulations.
He is also focused on expanding Prime’s existing transportation brokerage services. Low and his management team set to differentiate Prime from the competition by providing the best possible customer service at a competitive rate.
The company’s strategy is executed in large part through the strong performance of the company’s employees and owner-operator drivers, which is cultivated through the corporate environment created by Low and his team.
Originality and innovation will continue to be a critical part of future success at Prime, as Low and his management team continue to look for new ways to grow the business by continually evaluating new opportunities.
HOW TO REACH: Prime Inc., www.primeinc.com
WINNER - Services
chairman, president and CEO
Black & Veatch
Len Rodman is not interested in doing things the easy way. His employees at Black & Veatch know very well his saying of, “If it’s easy, someone else is probably doing it.”
Rodman wants to ?nd the innovative solution, the one that comes with a complex challenge and a dif?cult series of steps to enact — because Rodman knows all that effort will lead to a great product for his customers.
He joined Black & Veatch in 1971 as a design engineer and worked hard, progressing to become managing partner.
He has led the company’s transition from partnership to employee-owned corporation, a move that set the stage for explosive growth. It allowed greater access to capital, fueling expansion to new markets.
Rodman leads by ?nding ways to do things better. He is always looking for the next challenge and always wants to bring his employees along on the journey.
His ability to engage and inspire others to dig deep allows the company to devise unique solutions that delight customers and bolster the position of Black & Veatch in the infrastructure industry.
One of the most important ways Rodman helps his employees is through classes designed to teach engineers at Black & Veatch business acumen and provide them with critical management tools.
The chairman, president and CEO believes that each project needs to be valued and understood to be a integral component of the company’s growth plan.
The classes have progressed to provide the company with a steady stream of new leadership development.
With that leadership base as a foundation to build upon, Rodman has Black & Veatch positioned for strong success in the future.
HOW TO REACH: Black & Veatch, www.bv.com
WINNER - Financial Services
Brock and Brant Bukowsky
Veterans United Home Loans
Brothers Brant and Brock Bukowsky are no strangers to entrepreneurship. While students at the University of Missouri, they started a small business health care insurance company from their dorm room, and later, after Brock won a football ticket from a soda can, they started Buy-Sell-Tix, an online venture where ticket brokers could purchase tickets.
Then, in 2002, they began pursuing the mortgage business after a casual discussion with a former student. A grateful Veterans Affairs loan recipient, whom the company helped purchase his ?rst home, sealed the duo’s commitment to focus on VA mortgages — and Veterans United Home Loans was born.
The Bukowskys have developed a long-term sustainable company, enjoying success despite the fact that many other mortgage companies failed during the recession. In fact, Veterans United Home Loans has experienced more than 30 percent growth each year.
The brothers attribute their growth and success to three core values: being passionate and having fun, delivering results with integrity, and enhancing lives every day.
At board meetings, for example, it is not uncommon for the duo to lead discussions on how to increase the company’s focus on its company culture instead of improving ?nancial ?gures.
This culture also includes a commitment to the community. In November 2011, the Bukowskys launched their own charitable entity, Veterans United Foundation, which aims to enhance the lives of veterans and military family and friends. Many employees donate a percentage of their annual pay to the foundation, which the brothers match.
The Bukowskys plan to continue to grow the company in the future. They will soon be launching a title company and have also begun hiring VA loan specialists to establish Veterans United branch of?ces to establish face-to-face leads.
HOW TO REACH: Veterans United Home Loans, www.vu.com
WINNER - Communications
The world’s largest provider of questions and answers can trace its origins back to an old computer that was about to be thrown in the trash.
David Karandish received the computer that had been discarded from his father’s business and used it to discover the power of computer programming. As he gained knowledge, he put it to use helping businesses get online at a time when few companies even had a website.
All the while, he was gathering momentum for his eventual purchase of Answers. He had started a business, which, at ?rst, was going to be an e-commerce site that helped shoppers make smart buys. But after challenges cropped up in making that work, Karandish turned to a question-and-answer content model.
The business soon generated a database of 150,000 questions and answers and Karandish was ready to go after Answers.com. The deal was negotiated, and Karandish now had 150 million questions and answers at his disposal.
The company continued to evolve as social media began to take off, and Karandish made another acquisition, bringing his database to an astounding 15 billion questions and answers. He is co-founder of parent company Announce Media.
One of the keys to the company’s ascent has been Karandish’s strong belief in his team.
As CEO, he often will throw out challenges to his people and they’ll respond with doubt as to whether they can accomplish what he has asked.
If Karandish has doubt in his mind, he doesn’t show it, and this support from the top gives employees the boost they need to come through. Employees need to be energized and connected in their work and Karandish makes every effort to give them the forum that they need to succeed.
HOW TO REACH: Answers, www.announcemedia.com
WINNER - Industrial Manufacturing and Mining
Knight Hawk Coal LLC
When Steve Carter announced in 1997 that he was creating a coal mining company in southern Illinois, the reaction was a mix of hope and skepticism. At the time, Illinois’ mining industry had all but been gutted with employment dropping 64 percent in the 1990s. However, he knew that the big companies that had abandoned the region left behind enough coal, pent-up demand and good people to make it work.
In creating Knight Hawk Coal, Carter, who is president, played an important role in the revitalization of the coal industry in Illinois. During the 1990s, many coal consumers abandoned Illinois coal for lower sulfur coal found in the Appalachians as well as in the Power River Basin (PRB) in Wyoming. With the onset of advanced scrubbing technology, Carter believed Illinois Basin coal could be a lower-cost alternative to Appalachian coal and could also provide bene?ts over PRB coal through signi?cantly lower freight costs given Illinois’ central proximity.
Through his leadership, Carter has built Knight Hawk Coal from a ?edgling operation with one mine and 17 employees to a very successful company with six mines and nearly 400 employees. He understands that effective leadership involves making dif?cult decisions. He also understands that he may not always know the answer or have the best ideas, so he invites all employees to share views on various aspects of the business.
Carter believes that a collaborative culture will promote innovative thinking, which will be key to the company’s future success. Through his efforts, coal has made a comeback in Illinois, and with the help of his team, he is working each day to ensure that success is sustained.
HOW TO REACH: Knight Hawk Coal LLC, www.knighthawkcoal.com
As labor rates rise in China, shipping costs increase, the dollar weakens and supply chains grow more complex, many industry analysts are suggesting U.S. manufacturing activity will increase over the next five years.
And while some risks such as supply chain failures may be reduced if manufacturing firms are closer to operations and manage them more effectively, other risks — such as medical cost inflation for workers’ compensation and nonoccupational injuries — are on the rise, says Mike Stankard, managing director and Industrial and Materials Practice leader at Aon Risk Solutions.
“High-frequency, low-severity type risks, such as workers’ compensation or fire prevention, need to be managed on a day-to-day basis to prevent and mitigate losses,” says Stankard. “Businesses simply can’t overlook those because they face them every day. They also need to control losses that would prove catastrophic, such as large liability claims or the financial impact from natural disasters. Those risks can be managed with insurance because they are largely unpreventable, and businesses have an obligation to protect shareholders’ capital.”
Smart Business spoke with Stankard and John Gertken, senior account executive with Aon Risk Solutions, about how to manage risks facing the industrial and materials sector.
What are some risks that can impact the industrial and materials sector?
Aon Risk Solutions recently conducted a survey of business leaders in the industrial and materials sector to gauge their concerns, which included the economic slowdown — in both the U.S. and abroad, uncertainly surrounding raw materials and commodity pricing, and future innovations to keep up with customer needs.
In addition to the broad risks that drive macroeconomic issues affecting supply and demand, leaders must consider specific risks and manage them on a day-to-day basis to ensure efficient and effective execution of their business plan. In this area, risks include business interruption and supply chain failures, keeping up with emerging market opportunities and the risks and rewards of globalization.
What are some of the major drivers of risk?
The recession has had a profound impact on manufacturers that were forced to quickly adjust to changing demands for their products. The challenge was that no one knew just how low the economy was going to go. Some manufacturing employers reduced their work force by 40 to 60 percent and closed plants, although some of those reductions are starting to reverse. Many companies, especially automotive, used bankruptcy as the ultimate risk management tool to make long-term fixes to their macro-business models in the areas of labor contracts and raw material purchasing, shutting down inefficient plants and dropping marginal product lines.
Escalating health care costs continue to affect the work force both in terms of group medical insurance costs and workers’ compensation. When workers are injured, an employer is affected by wage replacement, medical costs and productivity leakage.
There’s also been reaction to all of the production moved offshore in the past 10 years. In 2011, natural disasters, such as the earthquake and tsunami in Japan, flooding in Thailand and earthquakes in New Zealand and Chile, put stress on the global supply chain, forcing companies to re-examine the vulnerabilities around their supply and customer chains. Many are now considering whether they were shortsighted when they moved production to low-labor rate countries that could potentially result in larger issues than just how much per hour they are paying employees.
How can mid-sized employers minimize risks?
Mid-sized employers may want to consider increasing workplace safety to avoid injuries that may result in expensive medical costs. As not all accidents are preventable, effective claims management practices on post-accident behaviors can help control medical costs and get workers back on the job as quickly as possible, even if it’s for light duty work.
When looking at the supply chain, manufacturers need to re-examine their supplier base to look for potential bottlenecks, single-source suppliers that could cause problems down the road. To minimize the risk, contingent business interruption coverage insurance around supply chain failure is available, which can cover loss of revenue.
However, it is important to note that underwriters have changed their business practices to limit their exposure in this space. They want to know about your suppliers — where they are located and how much business you do with them. For example, they might reduce your limits or restrict coverage so it only applies to direct suppliers rather than indirect ones, even though both can have just as much impact on your business.
Once risk management practices are in place, how can you measure them for effectiveness?
Your insurance broker, who optimally deals with your industry, knows it well and works with your peer companies, should be able to provide best practice benchmarks and performance metrics that can be continually updated. They can give you guidance on how to prevent and minimize claims as well as advice on the quality of insurance, how much you should purchase, how you should measure and value business interruption losses, etc. For example, your broker could perform a comprehensive evaluation of your workers’ compensation processes and losses, analyzing your environment and all of the losses you had on a granular basis. After determining the root cause of those losses, the broker would make recommendations such as ergonomic corrections, improvement in communications around losses and reporting lags.
These kinds of precise adjustments and the best practices associated with them could add up to millions of dollars in savings over time.
Mike Stankard is a managing director and Industrial and Materials Practice leader for Aon Risk Solutions. Reach him at (248) 936-5353 or email firstname.lastname@example.org.
John Gertken is a senior account executive with Aon Risk Solutions. Reach him at (314) 719-5193 or email@example.com.
Please visit aon.com/industrialandmaterialsreport to download a copy of the 2012 U.S. Industrial and Materials Industry Report.
Insights Risk Management is brought to you by Aon Risk Solutions