Saturday, August 24, 2013

Building Momentum

By Dave Christiansen, President and CEO

It was a pleasure having more than 750 guests in attendance at our annual stockholders’ meeting last month.  Each year a theme is selected for the meeting and this time we felt “building momentum” best represented our past year.

Not only this past year, but over the course of the past several years, the board of directors and staff has focused on how to build momentum. Admittedly, there were days when we took two steps forward only to take three steps back. The challenge we faced - and will continue to - is the world and progressive producers continue to build their own momentum and at an ever-increasing rate.

Significantly contributing to building momentum at MKC is our vision and strategic objectives.  Once these elements became a part of everything we do at MKC, your cooperative began to achieve more.  We became more focused and began communicating the same message to all of our stakeholders, customers, vendors and employees.
Establishing our vision wasn’t too challenging. We simply defined what we already knew this company had stood for the past 48 years.  We stated our intention to be a highly valued, customer-focused business engaged in profitable relationships with high business ethics and employee satisfaction.

Developing our strategic objectives proved to be a little more challenging. We wanted them broad enough to allow for innovation and creativity, yet defined enough to provide clarity and structure. While we knew we could shift our objectives as the business climate and agricultural environment dictated, the real challenge would be how the decisions made today would impact this organization for many years to come. 

I believe it is important to continue to communicate the objectives driving MKC today. I’ve shared them at a number of different meetings throughout the year, including the annual meeting, and I’d like to share them again now.

Improve profitability
Clearly, this builds momentum and really is not an option. While many things can impact your company’s profitability, there are some things we have little control over such as the weather, government regulations or interest rates.  However, there are many areas in which we do have control and this is where we focus much of our efforts. Being frugal is important. While it may sound silly as you watch us invest tens of millions of dollars, I assure you there is nothing that makes our employees more innovative and creative than not having enough money to do everything they would like to do. Being frugal can be a great catalyst to better expense management. It forces us to rationalize everything and ask, “What’s the good business reason for spending this money?”  If we all agree, we move forward.  If not, it’s back to the drawing board.

Profitability is about more than expense management and building new facilities.  It’s about making the investments and developing programs producers find valuable.  It’s about improving our forecasting and best management practices.  It’s also selecting the right partners and identifying key market growth areas that exist inside and outside our current footprint.  And it’s about clearly communicating our plans.

Profitability also dictates our ability to generate working capital and service debt.  Without adequate working capital, we would never be able to execute a grain marketing strategy that can provide profitability for our producers and MKC.  Increased volume and changes in marketing strategies have led us to need seven times the working capital we had almost 10 years ago.  This is no different than your farming operation. Without profitability, having the resources to achieve any objective is not possible.  There is no doubt profits help build momentum in our company.

Maintain growth
MKC and its leadership has always been growth oriented.  We’ve experienced both rapid growth and brief periods of relative calm. We’ve discovered growth has proven to be good in many ways for our customers, owners, employees and vendors.

Maintaining customer focus has led to the bulk of our growth. Since our last merger in 2008, the majority of our growth has come one customer at a time, averaging 100 new members every year.

Recently a person commented we gain customers because we are big. I told him it was quite the contrary.  We happen to be big and growing because we gain new customers. There is a huge difference. 

Being a growth-oriented company has also allowed us to attract great employees and provide them with career opportunities.  Because of our growth, vendors offer us unique programs that we can deliver to our customers. Very few, if any other businesses, has access to these same programs. Our growth has allowed us to attract partnership opportunities and will allow us to continue to attract additional merger partners.  All of the things associated with growth have ultimately led to greater offerings for our customers. That is simply why we think growth is so important.

Employ the best people
Not only do we try to hire the best people, we also offer career development opportunities for them. We do everything we can to retain them.  This is so important because it is through our people that we are able to achieve. 

Having knowledgeable people who can deliver programs you can actually understand and use helps us build trusting relationships. We want people on staff who can become trusted advisors to you and your operation.  Much of our efforts are focused on delivering this knowledge to your farm gate through programs such as precision ag, crop insurance, input financing, equipment protection, and our industry-leading soybean revenue assurance program.

These programs are delivered by people who have built relationships with you based on trust.  We know we earn trust slowly and we know we can quickly lose it should the trust be abused or taken for granted.  These relationships aren’t built around one employee, but around our entire enterprise.  They are built around the people who call on you in the field, those who unload your grain, spray your fields, make your bill, deliver your fuel and oil or answer the phone when you call.  Each one of them builds a relationship with you, helping us build momentum every day. 

I hope you can sense my excitement about the talent at MKC.  They are second to none and will help both of us accomplish all of our objectives. 

Build the brand
I’m not simply talking about the signage, advertising or equipment you may see when driving through our area.  It’s much more than that.  It’s more about the thoughts, the feelings, the experiences, and expectations our customers have when they think of or do business with MKC. It’s really about trust.

All of our efforts in renewing or replacing infrastructure, upgrading facilities, and hiring the best talent are grounded in building our brand. Major capital investments in facilities are helping us serve your needs better and faster and improving your overall customer experience.  Our efforts to serve your needs better at the farm gate, attract the best talent, and help you manage your risk are about improving customer experience.

We know we must be focused on fulfilling the objectives of our members and customers, not ours. Focusing on your growth and helping you manage the risk you face every day will serve to make MKC better.  Over the past couple years, we’ve intentionally added risk management to our list of core businesses. Our risk management group was formalized and expanded in response to input from you.  The need for timely, accurate advice and a total farm perspective has replaced a singular focus to simply help our customers by supplying inputs or storing grain.   Some of your risks today are clearly defined and manageable if we are diligent in our planning.  Other risks are harder to define or anticipate and we must be prepared for them as well. In response to the many conversations with you, our risk management division will continue to be our fastest growth area in our company.
 
Thank you, again, for this opportunity to share the cooperative’s strategic initiatives. We believe they are the driving force behind the momentum your cooperative is building in membership growth, industry relevance and the value it provides to its members.

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