Bill Myrick: Culture Club
Shortly after arriving at ProBuild from 84 Lumber, COO Bill Myrick spent two months at Harvard’s business school. Of the eight students in his living group, he was the only American. The Maryland native emerged more aware than ever of the importance of–and organizational challenges from–diversity.
“A culture can make a company successful or kill it,” he says. “At 84, we had one culture. At ProBuild, we had 10 or 15. So one of the things we had to decide was what our culture was.” What came out of that work, Myrick says, is “a collaborative yet binding environment” that seeks to balance centralization’s efficiencies with decentralization’s recognition of local variances. “We want to create one culture as a company, but we still want people to be who they are,” he says.
The result is a pair of structural changes, starting with a division of responsibilities. Regions and lower would have control over lumberyard operations, human resources, management of supply chain programs, financial planning, and credit management. Denver is responsible for information technology, finance and accounting, marketing, payroll, accounts payable, and basic supply chain relations with vendors.
Second, ProBuild is taking what used to be four operational regions and creating six that are bounded essentially by the mountains and the Mason-Dixon Line. Each is being led by people with deep experience in the area. For instance, Ed Waite, who has spent a quarter century at Lumbermens, Lanoga, and Spenard Builders Supply, will run the Northwest region, while Joe Lawrence, who headed San Diego–based Dixieline Lumber, will run the Southwest.
“In almost everything, what we’re doing at ProBuild now is what they were doing when they were independent,” Myrick says. “I want Joe Lawrence to make decisions locally.”
As a prelude to the changes now taking place, ProBuild held a two-day exercise for all the regional and central executives in which they were asked to answer 17 questions regarding culture and organizational diversity. For instance, the execs were asked, should the regions collaborate on solutions or make decisions on their own? In the morning, the execs favored regional autonomy But by the afternoon, Myrick says, they realized they needed to work together.
Michael Seay: It’s Academic
If any number indicates what ProBuild’s headquarters is about, it’s this: Roughly half of the HQ’s 200 regular workers work on information technology. That share rises to two-thirds if one counts the 100 outsiders brought in to help install and launch ProEdge, the centerpiece of the company’s technology initiative. Then again, ProEdge might better be described as the centerpiece of ProBuild itself, for in order to write the program, ProBuild had to rewrite itself.
“We said this is not an IT project, this is a business transformation project,” says Michael Seay, ProBuild’s chief information officer and the father of ProEdge. One part of that transformation was technical, involving the consolidation of information residing in five major data centers operating on seven different enterprise resource planning (ERP) systems into one system. But the tougher part was coming up with best practices for several different processes, and then dealing with people who didn’t like the change.
In a sense, Seay represents the backstage role that ProBuild’s owners have played in fostering its development. Seay spent 20 years with Fidelity, on top of 15 with IBM, before he was brought out of retirement in January 2007 to become ProBuild’s CIO. What the soft-spoken Texan saw shook him to his alligator-skin cowboy boots. Fidelity routinely spent 22% to 30% of its revenue on IT initiatives. ProBuild, like many lumberyards, routinely spent less than 0.5%.
“I came here and said ‘Wow, this is like stepping back in technology 30 years,'” Seay says. He was used to creating complicated operations like trading floors linked across several countries. Here, he says, “I have to go back to basics. … We’re doing a ton of training here.”
ProBuild now spends about 2% of revenues (which in 2008 would mean roughly $88 million) on ProEdge and the rest of its IT activities. The Oracle-based ERP system is being created to provide more data at more granular detail than typical LBM systems provide.
“We thought we could justify this system if we save 2% to 3% of our cost,” Seay says. “Typically, you can get a 7% to 15% return.” Once ProEdge gets rolled out across the country over the next 18 months, Seay anticipates ProBuild can cut its IT spending to 1.5% of revenues and, equally important, start putting 70% of that money into new business development rather than the 30% to 40% spent on that area now. It’s then that Seay figures he can retire again. “I created a big investment,” he says. “And I like to see a little return on it.”
