letsmakesenseofitall

[letsmakesenseofitall]

Succession Planning

On business succession: I have just finished digesting an article on Family Business Succession Plan in the Advanced Textiles Association (ATA) April, 2024 Specialty Fabrics Review, written by a specialist in the field, attorney, and business professor, Bob Gazich. Gazich brilliantly provides statistics on the importance to the U.S. economy of family businesses, particularly how much those of us in family businesses drive the economy in job creation, the U.S. GDP and are even responsible for 35% of Fortune 500 companies. But, as he points out as his premise for the article, few of the family-owned businesses are prepared to transition to new leadership and ownership. The results are that these essential resources for our economy often fail, despite the owners’ “grit and determination”, as Gazich puts it. And while he provides means that can remedy these consequences, I and my family, going through the process of succession, have different insights on the road we have taken to where we currently find ourselves. What I, and we as a family, have learned is that because we are committed to the long-term success and our entrepreneurial ideas in starting the business, succession planning should be an integral element in planning at the inception of the business. Additionally, what we have learned is that at the base of achieving that goal is the creation of a culture that relates to our values, so that not only what we “do” continues, but that what we “are” continues into the future. To be clear: this is not what we did, but what over the last 47 years we have learned as what we should have done. And we recognize that there are many impediments in doing so, chief among them is the dynamic motivation in pursuing our dreams as soon as we could in order to set the world and market(s) "on fire" with our products and services. So over the years we have brought in heirs apparent, potential owners, and even some who wanted to pursue their own entrepreneurial dreams. None of these approaches were successful. However, for about six years now we have come upon what we feel is for us the ideal approach, and one which may resonate with others as well. First, almost seven years ago, we hired an individual who we had observed managing in a totally unrelated field, but showed the abilities and processes that we identified as meeting our and our company’s values. That she was not in our industry was helpful because she started with a clean slate rather than being burdened by our industry’s pre-conceived business practices and limitations (How often have those in our industry been told that we “can’t do that”?). This was particularly important given our company’s diversified approach in providing products and services ranging from industrial and commercial applications to architectural and aerospace applications. Secondly, we wanted a person who would feel and think like an owner, and perhaps had the intentions of eventually becoming an owner. She started as a project manager, which immersed her in the culture we had created, and after a period of time showing the comfort of living within that culture, offered her the position of General Manager. Subsequently, based on the time spent in the GM position we offered a potential to buy into the company, but at that moment in her life and ours, this was not an option to pursue. Our next step has been to create a structure, and promote her to be our CEO, a newly created position, with a compensation package that would meet her needs as well as ours. She then filled her previous GM position and with the Board’s approval created the position of Engineering Operations Manager. This created a three position Top Management structure that would work under the policies of our Board of Directors, made up of our four-member family: My wife as President of the Board, me as Vice President, and our two sons in other Board positions. Our eldest son, who had previously been with the company for 17 years has now replaced me as the principal liaison from the Board to the Top Management, through the CEO. This structure has ensured that the role of management is clearly the prerogative of the three in the Top Management Group, while also ensuring that policies are set by the Board within which the management has the latitude to do their jobs. It also ensures that the cultural values we sought when entering business, and are at the base of our existence, are sustained. Obviously there are many details that went into our having settled on this approach, and there is always risk on whether it will or will not succeed, but for that answer, we’ll need to reflect in the next twenty or so years…that would/will put me at 104 years of age, an eternal idealist.

[letsmakesenseofitall]

To Build

Suppose we were building a structure (read the economy), and we had only one tool in our toolkit (read the Prime Interest Rate), to reach and measure our accomplishment (read the Fed's 2% inflation goal), wouldn't we be looking for other tools to both help us build that structure and evaluate the results?

[letsmakesenseofitall]

The Supreme Court Decision on Presidential Immunity

Listening to commentary on the Supreme Court's decision on Presidential Immunity, it is critical for the country, us, to decide whether the society in which we live is the foundation of that decision, that in fact we do live in an authoritarian body politic, and that the Court is just a reflection of that reality...or whether the Court is just reflecting on their own authoritarian biases and is just pandering to a minority of society represented by its belief in authoritarianism. There is potential to clarify this in part by the election in November.

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The (S)Election

As we and the nation ponder and reflect the ramifications of the so-called "debate", we need to put back into perspective what this election is really about: the future...of ourselves, our families, our communities and our country. In my mind there is significant likelihood that the next four years will see two new vacancies on the Supreme Court, additional challenges from both Russian and Chinese expansionism, a great need to manage emerging and existing international alliances, and the need to address domestic divisions that are amplified by media. To me this election is more about how we as a country make decisions regarding the issues than it is about the person we (s)elect to manage them.

[letsmakesenseofitall]

Whatever happened to the optimism of youth?

Former member of Congress, Lee Hamilton poses this as the premise for his column in the May 24th Fontana Herald. Hamilton reflects on his time in office meeting with young people who without exception optimistically “were curious, thoughtful and eager to face the world’s problems”. 

As the Chair of the Advisory Board for the Fontana Unified School District’s Career Technical Education (CTE) experiential education program, I can proudly respond that we have the answer to that question right here in Fontana! 

If Hamilton were to venture this way and visit our classes in the CTE program his optimism would be rekindled, and he would, as I have, experience a depth of interest, engagement, and, yes, optimism that is solidly represented by the students in this program.  Their excitement in pursuing professions and careers is reflective of their confidence in their own future, our community’s future, and the future of our country in the world.

They are experiencing engagement in dozens of fields along with their academic disciplines, from health services, to the media, to aircraft mechanics, forensics, and many, many more fields too extensive to list here, being conducted in the FUSD’s high schools (see www/fusd.net/cte). 

We in the community of Fontana need to proclaim this optimism for the future, as the dedication of our youth in their education pursuits deserve that support, rather than the overpublicized negativism that is exemplified by Hamilton’s column.

[letsmakesenseofitall]

This year is shaping up to be the best in our company's history, as many of the pending projects that have been waiting for the decision makers and in some cases federal funding to come to fruition.  Because of our limited dependence on outside funding, we have also been minimally impacted by the inordinately high interest rates.  Our observation of those on the general economy is a concern, because we feel that the goal of waiting for inflation to reach 2% is unrealistic given the liquidity in the US economy, some of which is potentially related to holdover from PPP funding, but other reasons related to the increases in wages as well as the low unemployment rate.

[letsmakesenseofitall]

Home Sales and Median Prices

I have written about data driven analysis in the economy, particularly about the 2% inflation goal the Fed is requiring prior to lowering the prime rate. I have written that, in my opinion, as long as there is significant liquidity in the market place people will spend and there is minimal incentive to lower prices. 

In today’s Press Enterprise, Jonathan Lansner’s data shows the increase in median prices for homes in Southern California have reached $760,000, and points out that this creates an affordability issue for those in the market to purchase a home.  All of which is true, considering required down payments and the income required to afford monthly payments, and given the current interest rates. While homebuying is slumping, Lansner points to three “niche” markets where sales are growing.

To explain this niche buying to me, is what is left out of the data from what I see in the community.  While I’m not in the business, I am seeing two things: First that most purchasing homes are generating the funds they need by selling their previous homes, and using the equity for the down payment.  And, second, I see many homes being purchased to be lived in by multiple families and generations, thus sharing the costs of buying the home. 

My observations aren’t revealing anything new, but I bring them up in this because they don’t seem to be included in the analysis of the data.

[letsmakesenseofitall]

Aging

Reaching my 84th year of living on this planet and in this universe, some things about that have come to mind.  Primary among those thoughts is how at whatever age we are we must learn from the past, but not be possessed by it, as I see many are.  No, we must use what we have learned from the past to prioritize our personal as well as community's future.  That is our purpose.

[letsmakesenseofitall]

The Unhoused and Mental Health

Recent headline in the LA Times: "Unexplained rampage leaves 1 dead, 5 injured"...First, how do you "explain" the "unexplainable"; but second, a partial explanation goes back to the 1960s' Lanterman-Petris-Short Act, which closed the majority of the mental hospitals.  What was true about the Act was the degree to which the hospitals had become the "Snake Pits" described in the 1948 movie of the same name, but as those of us working in the field at the time with community based services addressing mental health predicted, despite the absolute commitment of then Gov. Ronald Reagan, a major resource was removed from the agenda that would result in what we see to day in such rampages, but also homelessness.  So now we live with those results and scramble to make up for lost time with resources we have needed since that 1967 legislation.

[letsmakesenseofitall]

Fontana Unified's CTE Program

Whatever happened to the optimism of youth? Former member of Congress, Lee Hamilton poses this as the premise for his column in the May 24th Fontana Herald. Hamilton reflects on his time in office meeting with young people who without exception optimistically “were curious, thoughtful and eager to face the world’s problems”. 

As the Chair of the Advisory Board for the Fontana Unified School District’s Career Technical Education (CTE) experiential education program, I can proudly respond that we have the answer to that question right here in Fontana! 

If Hamilton were to venture this way and visit our classes in the CTE program his optimism would be rekindled, and he would, as I have, experience a depth of interest, engagement, and, yes, optimism that is solidly represented by the students in this program.  Their excitement in pursuing professions and careers is reflective of their confidence in their own future, our community’s future, and the future of our country in the world.

They are experiencing engagement in dozens of fields along with their academic disciplines, from health services, to the media, to aircraft mechanics, forensics, and many, many more fields too extensive to list here, being conducted in the FUSD’s high schools (see www/fusd.net/cte). 

We in the community of Fontana need to proclaim this optimism for the future, as the dedication of our youth in their education pursuits deserve that support, rather than the overpublicized negativism that is exemplified by Hamilton’s column.

[letsmakesenseofitall]

Business Succession

On business succession:

I have just finished digesting an article on Family Business Succession Plan in the April, 2024 Specialty Fabrics Review, written by a specialist in the field, attorney, and business professor, Bob Gazich.

Gazich brilliantly provides statistics on the importance to the U.S. economy of family businesses, particularly how much those of us in family businesses drive the economy in job creation, the U.S. GDP and are even responsible for 35% of Fortune 500 companies. But, as he points out as his premise for the article, few of the family-owned businesses are prepared to transition to new leadership and ownership.

The results are that these essential resources for our economy often fail, despite the owners’ “grit and determination”, as Gazich puts it.

And while he provides means that can remedy these consequences, I and my family, going through the process of succession, have different insights on the road we have taken to where we currently find ourselves.

What I, and we as a family, have learned is that because we are committed to the long-term success and our entrepreneurial ideas in starting the business, succession planning should be an integral element in planning at the inception of the business. Additionally, what we have learned is that at the base of achieving that goal is the creation of a culture that relates to our values, so that not only what we “do” continues, but that what we “are” continues into the future.

To be clear: this is not what we did, but what over the last 47 years we have learned as what we should have done. And we recognize that there are many impediments in doing so, chief among them is the dynamic motivation in pursuing our dreams as soon as we could in order to set the world and market(s) on fire with our products and services.

So over the years we have brought in heirs apparent, potential owners, and even some who wanted to pursue their own entrepreneurial dreams. None of these approaches were successful. However, for about six years now we have come upon what we feel is for us the ideal approach, and one which may resonate with others as well.

First, almost seven years ago, we hired an individual who we had observed managing in a totally unrelated field, but showed the abilities and processes that we identified as meeting our and our company’s values. That she was not in our industry was helpful because she started with a clean slate rather than being burdened by our industry’s pre-conceived business practices and limitations (How often have those in our industry been told that we “can’t do that”?). This was particularly important given our company’s diversified approach in providing products and services ranging from industrial and commercial applications to architectural and aerospace applications.

Secondly, we wanted a person who would feel and think like an owner, and perhaps had the intentions of eventually becoming an owner. She started as a project manager, which immersed her in the culture we had created, and after a period of time showing the comfort of living within that culture, offered her the position of General Manager. Subsequently, based on the time spent in the GM position we offered a potential to buy into the company, but at that moment in her life and ours, this was not an option to pursue.

Our next step has been to create a structure, and promote her to be our CEO, a newly created position, with a compensation package that would meet her needs as well as ours. She then filled her previous GM position and with the Board’s approval created the position of Engineering Operations Manager.

This created a three position Top Management structure that would work under the policies of our Board of Directors, made up of our four-member family: My wife as President of the Board, me as Vice President, and our two sons in other Board positions. Our eldest son, who had previously been with the company for 17 years has now replaced me as the principal liaison from the Board to the Top Management, through the CEO.

This structure has ensured that the role of management is clearly the prerogative of the three in the Top Management Group, while also ensuring that policies are set by the Board within which the management has the latitude to do their jobs. It also ensures that the cultural values we sought when entering business, and are at the base of our existence, are sustained.

Obviously there are many details that went into our having settled on this approach, and there is always risk on whether it will or will not succeed, but for that answer, we’ll need to reflect in the next twenty or so years…that would/will put me at 104 years of age, an eternal idealist.

[letsmakesenseofitall]

Our Schools

With all of the news regarding our schools, policy changes, challenges to what is being taught, how it is being taught, biases, and more, I want to mention that my experiences have been dramatic, but not in the same way. As a speaker in classes, as a participant on advisory boards, including chairing our Fontana Unified Career Technical Educational Advisory Board, and with our own internship program within our company, I have a very different perspective. First, I take my hat off to the dedicated and committed teaching staff who in every case I have experienced are in the classroom for one purpose: help the students grow and prepare for the life they will lead in the future. Second, as someone who has been managing our business for over 45 years, I see in the programs that are being conducted in our schools are directly relevant to offering our students opportunities to grow into local businesses, or even create their own businesses in the future. In short, what I am saying is that based on my experiences we have a great deal for which to be thankful: our educator/teachers, our school administrators, and our profoundly motivated students who are identifying the purposes they want to pursue in their lives aided by these teachers and programs.

[letsmakesenseofitall]

The Future of the GOP

As I have posted many times, I am a firm believer in the strength a two-party system brings to our country.  With so much of the GOP having gone off the rails in committing to the basic values of our country, perhaps the greatest challenge for all of us is how to put the Republican party back together again in the coming years, and unfortunately at this moment in time it's hard to see the leadership needed to do that.

[letsmakesenseofitall]

My writing from March 27, 2016

I want to share the following once again because of the degree to which I believe it resonates with the absolutism that exists today.  I want to follow up with other issues facing us today, but want for the moment to revisit seven years ago.

As I think of the implications of the meaning of this Easter Sunday, especially the idealism, I reflect on the political idealism of those who support my contemporary, Senator Sanders.  I share the great goals he and his followers espouse because it relates to my own life's experiences beginning with Kennedy's Peace Corps as a volunteer in the early 1960s in Thailand, to the Foster Parents Plan program in Peru later in that decade to the variety of social service programs here at home in which I was involved: working in anti poverty, juvenile diversion, Head Start, and other programs.  And then I pause and reflect on my recollections of a similar campaign for President filled with populist idealism and recall the outcome from that support of my still hero, George McGovern.  We pursued McGovern's candidacy with the same (or even more) enthusiasm of today's supporters of Sanders as we advocated with him that we needed to get out of Vietnam and address the social needs of our country.  And the result was what I'm concerned about today: our idealistic rugs were pulled out from under us as Nixon won 49 states, despite the beginning revelations of Watergate, created a so-called "War on Drugs" that sought to marginalize the African American community, and most critically in determining our current state of affairs, which led to the absence in the political process of much of the progressive energy that was needed to create the future.  Today's political environment is still impacted by the dynamics of that period of our history, and we need to think about putting our energy behind candidates at the national and local level who will be capable of bringing these ideals to both policies and programs and the appointments of the judiciary.  We need to think clearly about the implications of sacrificing our and our children's future if we pursue goals that we know cannot be achieved instead of recognizing that step by step we can indeed move forward in pursuing those ideals by putting our energy behind those at the local and national level who can do so.

[letsmakesenseofitall]

Follow up to "The Bubble We Live In"

Once the Bubble Has Burst

In my previous article, The Bubble We Live In, I cited Edmund Yong’s new novel, “An Immense World”.  I wrote Yong’s concern is that the bubble we live in limits us to thinking it contains all we need to know, and even worse, limits us to believing there is nothing else for us to know.  He writes that to break out of this dilemma takes “curiosity and imagination”.

So if we in our industry become curious and use our imagination and burst the bubble, what then do we do with our new-found freedom? 

My answer: through entrepreneurial pursuits we expand our markets based on our capabilities, or core competencies; however, to do that we must understand and clearly define “entrepreneurial” and identify what truly are our core-competencies and how we achieve them. 

Starting with core competencies:

For those of us who have been in business for a while, over the years we have built our businesses by serving customers with our knowledge and ability to provide value to them with our products and/or services.  Within our industry those products and services have a wide range of applications and markets, from commercialized products to technical products, and from consumer, to industrial, to specialized markets.

Whichever the applications and markets we have addressed, if we have done so for a period of time, we have developed our core-competencies along the way.  I believe that if not, we would not still be around. 

Further, we have built and grown our businesses based on the degree to which we are truly competent (I don’t believe in “luck” sustaining businesses), because the sustainable value created through our competency is what has resulted in customers coming back to us. 

There is a story I often share to identify the value we bring to the marketplace because what we are providing is perceived by our customers as valuable to them: when and if we are in the tragic situations of needing a heart transplant or brain surgery, we would not go to the lowest bidder, but instead go to the most qualified doctor.  The lesson is that the more important our need, the more important the quality over price.

So our task is to ensure our customers identify the importance of what we are providing in products and services to them, and establish in the customer’s mind that we have the competency to provide the quality to meet that important requirement for them.

In our company we ensure the reality of our competence through two commitments: that we will mentor our production, project management and administrative staff through our culture of quality as identified in our ISO and AS quality certifications and our Company’s Quality Policy; and secondly, that our co-workers are working within a culture of long-term commitment of our company to them and them to our company. 

The results: our average worker has been with our company for more than 12 years, and our average supervisor’s tenure with our company is over 36 years.  And those who have moved on have secured positions that create value in the organizations for which they work often based on the culture they take with them from their experience with us.

Our ability to fulfill our commitment to provide quality through our capabilities is based on the competencies built up over the years by our staff, so it is critical that we view our businesses as a “home” for them and that they receive the tangible and non-tangible rewards for their abilities to meet our customers’ needs.  So in addition to salary increases and providing health insurance and retirement benefits, they are front and center as we receive ATA and other awards that identify what their efforts have meant to our customers. 

The motto for students in our highly honored University’s College of Business’ Entrepreneurship school, is “Think like an owner.”  And this is the culture we have tried to create and promote in our business every day.

As stated above, we pursue the culture of entrepreneurship by creating sustainable value in the market place through our core competency in meeting the needs for industrial, architectural and technical fabric products.

We build on those capabilities by being entrepreneurial in our work as well as by building the connections to entrepreneurship in our company culture.  Both must exist to combine Yong’s admonition to be imaginative and curious, i.e. entrepreneurial.  However, to extend this behavior so that our organization represents entrepreneurship, we must back that behavior up with our competency and by bringing sustainable value to those we serve with our products and services. 

To clarify the point I am making, an example of the difference in being entrepreneurial, but not meeting our criterion for entrepreneurship because the of requirement to provide sustainable value is the, perhaps forgotten, “pet rock” that was marketed some years ago.  This entrepreneurial effort had little if any sustainable value, so died. 

I think I can predict with confidence that we and others in business did not get into business to die.  Perhaps some to build and sell, and for others, like ourselves, to create the sustainable value that is not only for our customers, but for ourselves and our co-workers as well.  But even if just to sell, creating the value for which someone would pay us to acquire our business is still paramount in our efforts, and fulfills the goals I am outlining in this presentation.

So, in summary, what we need to do once we are free of the bubble is to establish our goals and our methods to build both our core-competencies and our understanding of the practice of entrepreneurship to achieve those goals in meeting our customers’ expectations for the essential products and services we provide.

[letsmakesenseofitall]

Reality in Florida

I find it interesting that the governor of Florida is mandating evacuations of Floridians but was against mandating vaccinations against Covid. Mandate against free will when it suits you is the message.

[letsmakesenseofitall]

The current economic reality for small businesses

The impact of inflation, along with challenges in the supply chain that have affected production schedules and therefore shipments (i.e. sales), coupled with the aggressive increases in the Fed Rate, have all pointed to the importance of a strategy for businesses to be as self-dependent as is possible. Of course, this is always a goal of people going into business in the first place, but very often a strategy difficult to pursue as they are dependent on outside sources for financing, supplies, personnel, etc. Nevertheless, to the extent possible it is a long-term strategy to pursue, and the current conditions show why.