Forecast the future
Willis has a sign in his office that says, “A desk is a dangerous place from which to view the world.”
You can read all of the reports about market data and customer feedback, but Willis isn’t buying them. And if you want to correctly forecast the economic future of your industry and what that means for your company, he doesn’t think you should buy all of that, either.
“Everything you read in the paper says this economy is going to be a slow rebound, but in some markets, it’s going to rebound faster than others,” Willis says. “We really have to be calibrated on what’s going to happen in our market. The best way to do that that I know of is to get out there and touch and feel it more often.”
Basically, you can’t understand the market if you’re looking at meaningless data. Willis started his fact-finding mission with his customers, those who distribute Matco Tools and deal directly with the end user. Over a three-day period, Willis and his team scattered across the U.S. spending two days with sales managers and their distribution base on trucks and in shops. Then each one visited one of the company’s five regional distributor advisory councils to gather feedback from those immersed in that particular market.
If your company stretches multiple states, industries or divisions, you have to cover all of your bases. You can’t neglect a segment of your business when understanding market conditions.
“We can’t just do it in one part of the country because the economy in different parts of the U.S. right now is so disjointed,” Willis says. “Some are coming back faster than others because of the industries that surround them.”
The purpose of meeting with the customer one-on-one is to hear feedback that is more in depth than just an anecdotal comment, so when you get in front of customers, make sure you’re asking focused questions. Remember, you’re trying to gauge how well their business is doing and, in turn, what that means for your business.
On his most recent field expedition, Willis went to Chicago. Because Matco Tools is centered on the automotive repair business, he met with about 10 shop owners or managers and asked on-point questions: How is business looking? What did the last three months look like? Are you seeing improvement versus this time last year?
“Try to gain a sense of how are they feeling about (business),” Willis says.
Once Willis speaks to the person in charge, he checks that information by engaging in conversation with technicians on the shop floor. He asks: Are you working 40 hours a week? Are you working overtime? Are there days when you don’t have any work? How often is that happening?
“My intent (in the field) is to spend time with my distribution base, let them know that I’m out there,” Willis says. “I’m interested, and I’m concerned, and I’m here to help. That’s what the rest of my staff will be doing, as well.”
That message is clearer when coming from the president or CEO. The desire to be in the field is a personal choice. But it has helped him build customer connections and gain business perspective.
“I’m actually out there trying to better understand the issues and trying to come up with solutions for those issues,” Willis says. “I don’t always have the right answer, but I think being out there sends a strong message that, from the very top, we’re all interested in making this thing better.”
So once you’ve collected the field data, how do you make things better?
“The challenge will always be analyzing the data and reacting, which in some cases requires risk,” Willis says.
Willis and his team lay out the information gathered in the field as well as the competitors’ proxy statements. If you can understand your market share and how fast your industry is rebounding, you’ll be on the right path to define countermeasures to stay ahead of the curve. Willis says looking at previous performance history isn’t helpful if the market is going to turn around. So look at the meaningful information you do have in order to make an educated guess.
Matco Tools had been on the cusp of the market, but Willis is looking to make a “wholesale leap of faith” to get in front. His main concern is inventory. How much should he increase inventory based on where he sees growth opportunities and what he’s hearing from his distributors and end users? How much risk is too much?
“All I can do is ask the team to come back and, based on where we see the market going, saying, ‘We’re going to do better than that,’” he says. “Come back and tell me how much more of whatever we need do I have to go and get. What’s the cost of that going to be? And if I miss, how long is it going to take me to get rid of it?”
When you’re determining how much risk to take, the questions you really need to ask yourself are: How long will it take to implement your strategy? What steps must you take to implement the strategy? What are the consequences if you’re wrong?
But don’t sit on your decision too long. Willis isn’t.
“We’re early enough in the year if we make a mistake on the upside, we have time to get rid of it between now and the end of the year,” he says. “That’s why I think if we don’t get aggressive now, we’re going to get a lot
more conservative the deeper in the year we go.”
