2008 Compete Smart Conference News

Conference Keynote Urges Action,
Asks Core Questions

Three simple but core questions for manufacturers and allies set the tone for the sixth biennial Compete Smart manufacturing conference held in Missoula in early October.

The 2008 conference focused on innovation and growth and featured keynote speaker Doug Hall, founder of Eureka! Ranch, considered the nation's number one growth expert by Inc. Magazine and other business publications. Hall began and ended his presentation by asking the crowd of 288 people from across Montana,
"Have your profit margins grown in the last five to ten years?
If you lost your number one customer, would you survive?
And are you having fun (doing what you do)?"

If the answer to any of those is no, companies need to take action today, he told attendees of the event co-hosted by the Montana Manufacturing Extension Center (MMEC) and NorthWestern Energy and supported by many fine sponsors.

Not Random
Growing profit should not be random but achieved by using the scientific method set out by Dr. W. Edwards Deming in the continuous Plan-Do-Study-Act loop. What separates winners from losers is having a system for innovation and growth, Hall said.

Using research data from Eureka! Ranch on company success factors and real company examples, he explained what positively influences profit margin growth today and why it is important for companies to act. He recommended applying the Deming model in a "Fail Fast - Fail Cheap - Get Smart" cycle. In other words, don't study a project to death. "Get it 25 percent right, get feedback, then repeat it fast."

A key success factor for growing new customers and markets is how well the marketing message conveys what's in it for the customer, why that customer should care and why he or she should believe it.

Again and again, Hall brought the message home that, "If you are not unique, you better be cheap."

The reality, he said, is that prices for goods go down over time. Companies with a pipeline of unique choices for growing profit margin do so at an average of 5.8 times faster than companies with few choices.

Attract New Markets, Customers Using Core Strengths
He urged businesses to pick low hanging fruit rather than tackling
a totally new product for a totally new market. The bigger opportunities for growing profit margin are adapting your promise for current products or services to attract new customers and markets; continuing to improve your current capabilities; and leading current customers by offering them new products and services, he said.

Tackling a totally new product for a totally new market is the most risky strategy because of the time and expense. Hall pointed to data on 31 mega innovations, such as color televisions and VCRs, that shows it takes more than six years for such inventions to "take off."

"Think smarter and more creatively about your production, current customers and current capabilities," he urged listeners. "Get back to the passion that started your business, your father's business, your grandfather's business."

New Commitment to Small Companies
Last year, Hall partnered with the Manufacturing Extension Partnership to help small to mid-size companies get back to that passion and take advantage of the systems being used successfully by large companies at Eureka! Ranch, where he has researched data on growth for more than 25 years.

"My personal mission is to take what has proven successful for large companies and transfer these methods to help America's smaller companies," Hall said of that partnership. And while he was invited to speak at the conference on the basis of his positive, powerful message for manufacturers, Hall has been working closely with MMEC to ensured that the process, "Eureka! Winning Ways" fits Montana-size companies where nearly 80 percent have fewer than 20 employees.

New Stimuli for New Ideas
Hall shared ideas on how to think more creatively with the Compete Smart audience.

"No one stimulates their brain by always hanging with the same people, always going to sequels of the same movies or eating the same foods," he said. New stimuli come from reading from different resources, meeting people with different viewpoints, and partnering for diversity. It can be as simple as noting trends from the covers of magazines and refining those ideas, or reading and note-taking about how others businesses have become successful, especially those outside one's own industry, he said.

Think that's too much work? "Get over it," Hall said.

Eureka! Ranch research on company success shows that the number of practical ideas invented more than doubles with increasing and varied stimulus over low diversity in thinking. Technology scouting was recommended as one of the best places to invest time and energy when looking for innovation inspiration.

"Like minds make for like ideas," he said. Gain stimulus from diverse viewpoints; seek perspective from the different personalities in your own company. Bounce ideas off people you meet. "You'd be surprised how far people will go to help you if you just ask!"

View on Customer Input
Hall expressed his opinion on the voice of the customer as the driver for new growth using this quote from Henry Ford about the Model T, "If I had asked people what they wanted, they'd have said faster horses."

Business must lead customers to new uses for their goods or by creating complementary products. "Being proactive, not reactive is 10 times more predictive of success," he said.

The audience was instructed to take out and look at their business cards. They were then asked if the unique aspects of their product or service were listed, and if not, "Are those things a secret?"

Features are not benefits. As an example, he counseled, don't tell people the faucet you make is from cast brass patterns with copper tubing… Tell that it "provides three times greater flow - 19 vs. 6 gallons per minute - installs in half the time…"

He urged people to strive for clarity versus confusion. A confusing message about what's in it for the buyer "is not a strategy for success!"

Urgency to Act
Hall also expressed an urgency for U.S. companies to take action now. China's 20-year plan is to focus on innovation as a core strength, he said, with their motivation easily demonstrated in a tiny hard drive display driver manufactured there. China now receives three percent of the profit from their effort while Japan, the inventor of the device, receives 83 percent of the profit. The math is clear.

Hall also told the audience that adapting product for new markets is important. And exporting should be considered as a viable, even lucrative, avenue for growth. The decline in the value of the U.S. dollar has created "a free cost reduction" today, he explained. Additionally, there are many more people in the developing nations, such as India's middle class of 340 million, than in the developed nations.

Passion Plus Asset Bring Rewards
Using Eureka! Ranch client examples, Hall shared how leveraging passion and asset can create a better bottom line. One pewter jewelry maker who was selling $10,000 of goods in 12 months was able to explore and identify a customer need using the Ranch's Trailblazer methodology. From that process, the company created a unique attribute and marketing message that enabled him to sell $50,000 of goods at just two trade shows. The message, "Your favorite pair and a spare" and a card of three earrings, rather than the customary two, made his product unique for women who know the frustration of losing a favorite earring.

Hall wrapped up his presentation with several personal stories of survival from his passion for outdoor adventure, one of which was falling through the ice in the Arctic Ocean, being helped out, and skiing for an hour to retain body heat before reaching safety.

He used his stories to demonstrate his conviction that companies must have the courage to take action and to underscore the alternate outcome in Deming's statement, "It is not necessary to change; survival is not mandatory."

Afraid you might fail? he asked. "Take comfort in the fact that taking action will result in less regret than if you were to take no action at all."

For more information about business growth, contact MMEC at 406-994-3812.

Click Here to view slide show of Doug Hall's keynote presentation in it's entirety.

Back to top

MMEC wishes to acknowlege and thank co-host NorthWestern Energy & generous co-sponsors:
Montana Department of Agriculture and its Montana's Agro-Energy Plan program,

Montana Chamber of Commerce, First Interstate Bank, Montana Hydraulics LLC, Montana Community Finance Corporation, Sterling Savings Bank, Montana Department of Commerce,

Montana State Fund, General Distributing, MSU College of Engineering, Technical Systems Integrators, Prospera Business Network, UPS, Montana-Dakota Utilities, Missoula Airport Board, Interdyn Busines Microvar, Montana Department of Environmental Quality, Montana World Trade Center, ColorWorld Printers & Allied Waste Services.

Click here to return to main conference summary page

Montana Company Leaders
"Lines on Success"
feature sponsor First Interstate Bank

Peter Stark North Slope Sustainable Wood LLC
Research Stimulates 'Greener than Green' Opportunity

Somewhat surprised by what he called a "tidal wave of people in the room," Peter Stark, co-founder of North Slope Sustainable Wood, was the first of three Montana company leaders to speak to a breakfast audience of more than 250 people during "Lines on Success" at the October Compete Smart Manufacturing Conference in Missoula.

Stark's story is compelling, showing how the business and environmental communities can work hand in hand to mutual benefit. It shared a personal evolution and underscored the value of outside stimulus to successful entrepreneur-ship, a point emphasized by the conference keynote speaker and growth expert, Doug Hall, the previous day.

Describing himself as a "tree hugging eco-liberal from way back," Stark told of the twists in his journey as an outdoor writer, forest landowner, and new father that led to his becoming co-founder of a wood product manufacturer.

He showcased high profile examples of the company's premier product, larch flooring, and explained that the product goes beyond sustainable to "greener than green" as a byproduct of forest restoration in the Northern Rockies. He also described the ripple effect his firm has created for Montana businesses involved in the wood industry ranging from sawmills to secondary wood product companies.

"Lines on Success" is a favorite conference feature in which speakers often describe how they have taken a problem and made it into a business opportunity. Some focus on overcoming obstacles of doing business from Montana. Their stories resonate well with participants who often face similar challenges. The segment was sponsored by First Interstate Bank at the event co-hosted by the Montana Manufacturing Extension Center and NorthWestern Energy.

Evolution in Thinking
Stark began his talk by recollecting the pride of first owning forested property on a beautiful, high ridge bordering the Rattlesnake Wilderness, overlooking Missoula, and thinking, "I'm not going to cut a single branch of a single tree."

He then explained how that thinking changed after he participated in a valuable forestry stewardship class put on the Montana Extension Service and where that change has taken him.

After completing surveys and providing core samples for the class, Stark said he came to realize his acreage, primarily of ponderosa and larch timber, was "very sick" and, like much of Montana's timbered land, prone to catastrophic fire.

He learned that by not cutting a single tree he would actually continue the choked growth that was endangering those trees; that a healthy forest has 20 trees per acre and his land had 837, many small and struggling for limited rainfall and nutrients. Thinking of building on the land, he first approached Mark Arno, an area forest restoration expert, about the possibility of thinning the growth and possibly trading the logs for lumber to build a home there.

"I wasn't interested in logging it commercially, just in helping restore its health," Stark said.

Wood's Beauty Demands High-Value Use
At first, Arno put him off because of the expense (several thousand dollars an acre for steep slope) and a low timber market, especially for small diameter logs. All Stark could think was that in order to restore the health of his forest, the junk wood would have to be burned on site or the beautiful tight-grained wood be wasted on low value lumber like 2x4 studs.

"I kept thinking there must be some use for this wood," he said. Then he remembered a remark from the class not to think of "those skinny little suppressed growth trees as junk" as that kind of wood was used for violin necks.

"Oh great," I thought."Eighty acres of violin necks!"

Research Stimulates Better Idea
With that he began doing research on higher value uses and started calling everyone he could think of, even the Japanese Consulate.

Meanwhile life had moved forward, and he and his wife Amy Ragsdale now had two small children and had abandoned the idea of a home in the woods. He continued his writing career with some success. And Amy was a professor of dance at the University of Montana, while also running a modern dance company.

"Life was at a frenzy level," Stark said, "So I asked her, 'what can I do as stress relief for you?'"

The answer, "'Build me a dance studio in the back yard."

Pricing it out, they found that wooden studio flooring would be very expensive. Again Peter conducted research and discovered that larch is hardy and good for flooring. "It was even used in Viking ships," he said.

Finally in 2002, Arno, the restoration forester, was persuaded to come on board and began to thin larch and fir trees from the overcrowded forest. Stark bought back 25 tons of larch logs and sent them to Hellferstout Lumber in Dillon to be made into flooring for the studio.

Project Shared Visually
Using PowerPoint, Stark showed slides of Matt's crews thinning the stunted stands using specialized low-impact machinery like a cut-to length harvester and rubber-tired forester, and the resulting beautiful forest of bigger healthy trees.
He told the audience that when the thinning project began, he boldly posted a private property restoration project notice, complete with his name and phone number, on a tree visible to passersby, fully expecting to get "calls from enraged environmentalists."

Instead, he received a call from the local chapter of Sierra Club, and a media tour was arranged to tell about the example of good forestry. Beyond a beautiful a dance floor, the work had showcased possibilities and began to attract architects, builders, forest ecologists, and more media, he said.

Niche Grows
In 2004, with their shared passion for restored forests, Arno and Stark along with several others founded North Slope Sustainable Wood (named for the slopes where larch, the only evergreen that sheds its needles in the fall, grows). The company's feature products under the Treadlight™ brand are made from tight-grained larch logs. Its slogan is "New Floors Restoring Old Growth."

One high profile use Stark showed the audience was the larch flooring in a home in the Street of Dreams tours in Seattle, showcasing the newest trends and most innovative ideas for luxury home building. One slide showed Treadlight flooring in the Montana Governor's mansion.

Ripple Effect in Economy
The restoration effort and higher-value by-product has created symbiotic ripple effect in several Montana communities and businesses. In its own warehouse, a North Slope employee does the grading and sizing. The tongue and groove larch flooring is specially cut to one-inch thick lengths at Tricon Lumber, a high-speed stud mill in St Regis that was very willing to do the changeover to cut the one-inch thickness needed. A family sawmill with a kiln in Corvallis dries the lumber. A chunk of the process is done at Burnich Frame and Moulding in Missoula, and a new endeavor using small diameter larch for window casings has been cultivated with Clawson Windows, also in Missoula. A sample casing was included in the Montana Product Showcase at Compete Smart.

Stark shared some of the business challenges.

"We have a number of obstacles like those you face. One is our costs are high, and we subcontract a lot of our manufacturing. It is very hard to compete on price with fir and big mills on the West coast."

He said the company can always compete in the green market when its story is told. He also pointed to the irony of not having a desired wood certification by the highest green certifying body in world, LEEDS. "Wood certification is a complicated issue," he said. North Slope can't yet get the official stamp that would help with marketing even though the logs are taken as a result of good stewardship methods.

Growth is another issue prompted by investor inquiries, which means a future decision on how much more to ramp up.

Peppered with Questions
The audience peppered Stark with questions at the conclusion of his talk. Among them were questions about the issues of twist and turns affecting output from small logs, whether any old growth trees are harvested during thinning, and if the business uses any other species.

Stark said larch does have its issues, and a special kiln is needed for drying to minimize warp. And while old growth can be harvested, at least 50 percent of healthy old growth is retained. The company only uses larch for flooring today but is exploring western hardwoods from restoration projects as some customers want a harder wood than larch.

He was quizzed about the viability of stewardship thinning for private landowners.

"If enough logs can come off, it could be viable, maybe even making some money." Some, like his steepest ridge may not, he answered, because of costs or difficult access.

Asked whether he is using his writing to spread the message that stewardship is important and to help change public perception, Stark said several years ago he proposed a book on the story of the business, which was tiny then, and others like it as a wave of future.

"The reaction was 'nahhh.' I told them it's coming, and it's going to be a big movement. They probably would be receptive now," he ventured. "I'd love to be a part of it. I'm trying."

With demand growing, Stark said he now finds himself at another personal crossroads - immerse himself further into the manufacturing world or continue his writing career...

Back to top

Return to main conference summary page

Bjorn Nabozney , Co-founder
Big Sky Brewing Company
Bjorn shared the story of starting a capital-intensive business with friends and without cash and then growing the business into a fully functional brewery in just six months
while keeping the best interests of employees, customers, retailers, distributors, and investors in mind. The audience trembled along with him as they heard about his occasionally having to wear a tie when soliciting funds. Continuing growth led Big Sky Brewing Company to build a new 38,000 square foot brewery after less than seven years of operation. Big Sky Brewing Company has grown to be far and away the largest brewery in Montana since its founding in 1995. The brewery's Moose Drool Brown Ale was recently named as one the five most recognized images associated with Montana. All of Big Sky Brewing's beers are brewed in Missoula and are currently sold in 18 Western and Mid-Western states. More on this to come...

Back to top
Return to main conference page

PLATINUM
Montana Department of Agriculture
Montana's Agro-Energy Plan

GOLD
Montana Chamber of Commerce
Montana Hydraulics LLC
First Interstate Bank
Montana Community Finance Corporation
Technical Systems Integrators
Sterling Savings Bank
Montana Department of Commerce

SILVER
General Distributing
Montana State Fund
Missoula Airport Board
UPS
MSU College of Engineering
Prospera Business Network
InterDyn Business Microvar
Montana Dakota Utilities
Montana Department of Environmental Quality

BRONZE
Montana Technology Innovation Partnership
MSU COB Family Business Program
Allied Waste Systems
Montana World Trade Center
ColorWorld Printers

Related activities
SkyWindWorld.com installed kites throughout the conference facility, adding color and motion befitting the theme "Electrify Your Business," which played to Ben Franklin's innovation with kites that led to a new product -- the lightning rod, and the creativity and the human spirit that kites themselves embody.

Sterling Savings Bank assisted MMEC with an effort to bridge the ingenuity of today's young people and manufacturing as a real career option, by providing conference seats for 37 high school students and their advisors. Five Skyview Biofuels Team students, with advisor Mr. Fred Michels from Billings, and four Corvallis Robotics Team members, with advisor Tracy Dickerson, exhibited their latest projects and the competitive robot in the exhibit halll the first morning. A contingent of advanced marketing students from Missoula's Sentinel and Big Sky high schools joined the teams for the keynote luncheon and stayed on for a customer service session made available through the Montana State University College of Business Family Business Program.