Qualifirst CEO Yves Farges and I have attended Seth Godin’s altMBA course and, naturally it is eye-opening and relevant. One of my assignments challenged us to write from the heart, and to stretch our thinking on a problem to the point where it becomes uncomfortable. So I decided to make the theme all-encompassing and ask, â€œWhat is Qualifirst for?â€
This type of question forces you to decide who you are, and in turn it changes the approach to every other challenge the company faces. It forces us to decide whether we distribute products or whether we are here to spread our passion for food. It made me become appropriately introspective: What do we create? What can we create? What do we want to create?
It is easy for the management of a company to become emotionally involved in a product. Not in the sense of falling in love with a product â€“ even though that’s not entirely a bad thing â€“ but in the sense of making inaccurate or outright wrong decisions by allowing emotion to take over. A good example of this is when an importer loses the right to import a brand, and a competitor takes over. The reaction is to seek out a competing equivalent brand in order to stay in the race. But this decision is almost always wrong, and often leads to failure, because it doesn’t take into account the sunk costs that come from developing that brand.
The better idea is to reframe the problem, look at the capital and resources that have been freed up, and re-allocate these resources in a fashion that better suits the company and its customers.
This happened to us with cheese. For quite a while in the 1980s and 1990s, our Vancouver office was a leader in importing cheese. But starting in the year 2000, sales of cheese became less profitable, and actually became a money loser. This was one time when we had to ask ourselves, â€œWhat are we for?â€ and â€œWhat would it mean if we no longer sold cheese?â€ Our answer led us to stop selling cheese and focus on other products instead. This helped us return to profitability.
Pushing the â€œwhat is it forâ€ question further
My second â€œwhat is it for?â€ question happened when our relationship with chain stores started to change. At one time, chains represented 30 to 40% of our business. But eventually they became increasingly demanding and inflexible, and both volume sold and profits started to trend downwards for us. We asked â€œWhat are we for?â€ and we concluded that our mission was to spread our passion for food. We realized that chain stores do not truly fit into that bracket; they are about high volume. Once we stopped selling to most chain stores, we saw a significant increase in profit.
My third â€œwhat is it forâ€ questions looked at our company’s history in three acts:
- The first â€œwhat is it forâ€ question that started our company asked whether Qualifirst Foods was about pleasing our suppliers by selling their best products.
- The second â€œwhat is it forâ€ question asked whether Qualifirst Foods was about selling any product of quality that would make us a profit. This is the â€œwhat isâ€ that we drifted into as we lost our way.
- The new and current â€œwhat is it forâ€ question asks whether Qualifirst Foods is about selling products under our own brands.
This process has led to the conclusion that we need to develop our own products under our own labels to free ourselves from the demands of suppliers.
This third â€œwhat is it forâ€ has led to a revelation among our team that not only allowed us to keep a product once it is developed, but it freed enormous resources that we had tied up in supplier relations. This gives us greater leeway to work on our business.
A Subsequent Decision
After resolving the â€œwhat is it forâ€ question, we asked a subsequent question: â€œWhat is an outside sales representative really for?â€ The answer is â€œTo develop new businessâ€ and not â€œTo take orders on a day to day basis.â€ This revelation has allowed us to cut our outside sales team by 50% while still increasing sales. This would not have happened if we had not questioned ourselves in this way.
Deciding to focus on our own brands was a life changing decision for me that has simplified and focused our business.
altMBA leader Seth Godin commented:
Others weighed in with their own comments:
Qualifirst COO Jodi MacKinnon:
The president is giving the team freedom and an unprecedented level of trust to run the company. He is willing to lead the way and not pass the hard work to anyone else. The market is changing. To get to $20 million, we need a well-defined and articulated roadmap and he is going to deliver that. This means the sales that today are growing at 10% will grow to more than 40% with the proper tools in place.
From another team member
We all have our strengths and weaknesses, and I feel confident and proud to be part of a company that looks ahead to maintain strength for a very long time. Sure, we’re going to hit some major bumps along the way, or even repeat some of the same mistakes but as long as we’re open to new ideas and strategies instead of shutting them out, then I think we’ll be fine and even thrive as the times are changing. Some of the basic fundamentals will need to be the same but more â€œexpandedâ€ to meet today’s demands as well.
From another team member:
This resonates with me in that you (Ray) are someone who is still very active in improving the future of Qualifirst. You alone know the business better, rather than consultants that you encounter. Without this energy you put in, maybe we would not be here today. As is the case with many of our competitors.