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Interview with John Warrillow - author of Built to Sell

Just 1% of small business owners successfully sell their businesses each year, though most of the vast majority of small business owners would like to think their business is sellable. This stark reality is one that John Warrillow ran up against early in his career and now spends his time sharing ways to avoid that reality with other entrepreneurs.

Recognized by B to B Magazine's "Who's Who" list as one of America's most influential business-to-business marketers, John is a frequent speaker on a variety of issues that impact small business owners. This month he spoke with us.

John's books, Drilling For Gold and Built to Sell: Turn your Business Into One you can Sell have caught on in the small business community. His focus, unlike most books marketed to entrepreneurs is not about running a business but rather about building a business that is sellable.

As an entrepreneur in the service industry, John's words, during his interview resonated with me. One of his key points is that if you ARE the key asset of the business, then it isn’t worth much if you sell it. If the service you offer is not easily replicable by others within your organization, then you have less a business than a "job" in a company that only employs... you.

Wow - strong, but true words!

It's just this type of expert advice and easily understandable concepts that makes John's book so readable and on target for entrepreneurs hoping to cash out and profit from years of hard work building a sustainable business. John’s easy-to-read book outlines 14 steps to building a business that potentially is lucrative to prospective buyers.

Since I've heard much about John and his book it was a pleasure to find out who he admires (Bo Burlingham is the editor-at-large of Inc. Magazine) and what companies he thinks have a great model for developing a business that can be sold profitably. (A company that takes a service generally sold by local businesses and replicates the service on a national level – fascinating reading.)

John's experience as a small business owner, he has started and exited 4 different companies, gives him the depth of knowledge to write frankly about the challenges small business owners make. He shared some of his insights with us in his very approachable style.

Enjoy!


Q: Who were your early role models and what were the main things you learned from them?

A: Bo Burlingham is the editor-at-large of Inc. Magazine and the best selling author of The Great Game of Business, Small Giants among others. Bo agreed to write the foreword for my book so we collaborated. He's an incredible storyteller and a wonderful human being. He has the ability to distill a, complex business concept into a language anyone can digest.

I hope 5% of Bo's ability as a storyteller rubbed off on me.
My three favorite books for entrepreneurs are:

1. Small Giants by Bo Burlingham (key lesson: you don't have to be big to have a great business)
2. The E-Myth by Michael Gerber (key lesson: work on not in the business)
3. The Four Hour Work Week by Tim Ferriss (key lesson: get a life!)

Q: What inspired you to write "Built to Sell"?

A: I have started and exited 4 businesses in my career. In 1997, I started Warrillow & Co. as a boutique consultancy. Over time, I built the company but eventually hit a plateau: I was doing most of the selling and clients expected me to be personally involved in their project's execution. This of course constrained our ability to grow. I earned a good living but the cash flow was inconsistent and I continually struggled to balance client service and business development.

By 2004, I had decided to sell the business. I met with a few M&A advisors who explained to me that my business was not worth very much: I was told the best price I could hope for was 50% of revenue or 3 or 4 x EBITDA and even a deal at these low multiples would only be possible if I agreed to stay on for 3-5 years. I did not receive this news well.

At the beginning of 2005, I committed to changing our model so I could sell the business for a higher multiple. Over the next year, I transformed our offering from a billable hour consultancy to a subscription business where we charged an annual, up-front fee for a series of market research reports. We discontinued custom consulting and transitioned 100% of our revenue to recurring subscriptions. We went from 5 or 6 clients to 100 subscribers. Personally, I went from hand-holding each client to not knowing most of our subscribers.

In 2008, I sold the business to an American-based Fortune 1000 company.

I took some time off and realized I wasn't ready to "retire" so I wrote Built To Sell to share my experiences of transforming a business into something sellable with other business owners who would like to own a business they could sell one day.


Q: What did you learn in the process of putting together this book?

A: The statistics around selling a business are stark:

• 97% of all businesses in America are small businesses – virtually all would like to think their business is one they could (they may not want to yet) sell one day
• 50% of small business owners want to exit in the next 10 years
• Just 1% successfully sell their business each year

Q: What is an example of a great company that people have never heard of?

A: The School Photography Company is a U.K.-based company that has approached the business of photography in an entirely different way that makes their company a valuable, sellable asset. The School Photography Company specializes in taking classroom photos. They have a special formula for getting kids to come into a room, sit down quickly, and smile broadly at just the right time. They teach their secret formula for herding munchkins to a group of young photographers eager for the work experience. Each year school principals repurchase their services to take the obligatory classroom shot and document the progress of their flock. Customers - both parents and principals - value The School Photography Company's work because they get kids out and back into their classrooms quickly and efficiently.

The typical photo studio that takes a hodgepodge of assignments is nothing more than a glorified job for their owner. And therefore, when the owner decides s/he has had enough, there is nothing to sell. The School Photography Company in contrast is a business that is not dependent on any one photographer while offering a repeatable and valuable service. They have a scalable formula and a sellable company.

Bio:
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board (NASDAQ: EXBD). In 2008 he was recognized by BtoB Magazine's "Who's Who" list as one of America’s most influential business-to-business marketers.

Billion Dollar Bidding

Move over E-bay! When auctions come up in conversation, a number of companies come to mind. E-bay of course, Sotheby’s maybe, but maybe not Burnaby-based, Ritchie Bros. They are, however the largest auctioneer of industrial products on the planet operating in over 110 locations, in 25 countries around the world.

Our guest this month is Ritchie Bros. COO, Bob Armstrong. Bob joined Ritchie Bros. in 1997 and has seen the company’s gross auction sales exceed $3.5 billion dollars. His role, as he describes it is less sales and more operational efficiency, but he had some interesting things to say about innovation and transparency, two words that we have been hearing a lot about these days.

Ritchie Bros. is somewhat unique in the auction world as they take pride in their “no reserve, no minimum bid” philosophy. In other words, the customer sets the price. While this might seem to the company vulnerable to low bids and money losing auctions, this philosophy of strategic transparency ensures that each auction is eagerly awaited and attracts bidders from around the world, on-site and over the internet at rbauction.com.

As the company has grown larger, Bob’s role has expanded and he and most of the company’s employees have gotten busier and busier. While this is obviously the path to business success, Bob shared with us his concerns about the ability to innovate in a fast paced environment where employees are focused on day-to-day operations.

I have to agree and think that this is a concern of many companies. In this current recessionary climate, where risk taking is already at a low, are larger companies in danger of losing their capacity to innovate? As a company gets bigger and more structured, of course both risk-taking and the time to innovate start to erode. Can we as managers reverse that trend and encourage innovation at every level of the organization?

Another key topic that I discussed with Bob was the issue of transparency. In the 21st century, transparency has become a byword of excellence in business management. Bob is fortunate to work for a company that has embraced transparency since its inception. We can learn a lot from their experience. Transparency breeds trust from vendors, customers and other company stakeholders, obviously an advantage in business operations.

At this intersection of trust and innovation lies acceptance and more importantly good feedback. Innovative companies must of course come up with bad ideas as well as good. When the trust bred by a corporate culture of transparency leads a company to introduce less than successful concepts, feedback from stakeholders tends to be both honest and helpful, reducing the amount of time spent on bad ideas. On the other hand, successful innovative concepts are embraced and rapidly spread by the company stakeholders. The role of transparency in innovation may be undervalued but is very real.

What is your role at Ritchie Bros.?

As the Chief Operating Officer for Ritchie Bros. Auctioneers, I oversee our auction operations, IT, property development and appraisal teams. Essentially my mandate is to improve the operating efficiency of our business. I’m focused less on how we can generate more sales and more on how we execute our auctions.

What key trends are affecting your industry?

A big trend over the past ten years regarding the buying and selling of commercial and industrial assets has been the increase in transparency. Everyone is more informed than ever before because of the quantity and quality of information available. No longer are there certain players who have an information advantage over others. This makes it more difficult for intermediaries to buy low and sell high.

Ritchie Bros. has always stressed the importance of transparency. We conduct unreserved public auctions, meaning there are no minimum bids or reserve prices—our customers set the prices, not us and not the equipment owners. In order for this type of auction to be successful our customers must be equipped with detailed equipment information. This is why we encourage our customers to inspect the equipment before the auction, and why we provide equipment details and make auction results available on our web site.

We believe our dedication to transparency has helped us become the world’s largest industrial auctioneer selling more equipment to on-site and online bidders than any other company in the world. We have been conducting auctions for the past 50+ years and during that time we have established 110 locations in more than 25 countries, including 41 auction sites worldwide. Last year we achieved US$3.5 billion in gross auction proceeds.

How do you measure innovation success?

With Ritchie Bros., success is based on our ability to provide exceptional customer service while increasing operating efficiency. We are always looking for ways to improve in these areas—we want innovative ideas that will improve the customer experience or help us sell more equipment items in less time or with less staff.

For us, one of our most precious assets is the time our Territory Managers (sales people) are available to work with their customers and potential customers. We are always searching for innovations that allow them to spend more time with customers.

Also, as we continue to expand and purchase land around the world, which can be very expensive, we must find ways to maximize the utilization of that land. We are always looking for innovations to help us achieve this.

What is the biggest pitfall that impedes successful innovation?

All of our best innovations have come from someone in our organization having a creative idea and the guts to follow it through to its fruition. However, as we continue to expand and get busier, there is a continuing pressure on our people to complete the day-to-day business. This allows them less time to devise new and better ways to accomplish the tasks at hand.

Also, as we continue to expand, we increasingly institute rules, policies and procedures that might stifle innovation. We continue to struggle to find ways to encourage our employees to think outside of the box as we grow and become more structured every year.
What is an example of an innovative company that people have never heard of?

VendAsta, which is a small software development company based in Saskatoon, Saskatchewan. They helped us develop our Field Asset Information Management (FAIM) system, which allows us to capture higher quality equipment information and to do it much more efficiently. It saves our sales people time and enables us to service our customers better.

The folks at VendAsta went beyond our requirements and ended up delivering a product that exceeded our expectations. They took the time to get to know what we really needed and built a far better system than we had originally specified.


Bob Armstrong Biography:

Bob Armstrong joined Ritchie Bros. Auctioneers in 1997. Bob has worked in several roles within the organization, starting as the Company's Manager of Corporate Relations. In 2000 he was promoted to Vice President, Investor Relations and Corporate Secretary. Subsequent roles included Vice President, Internet Services and Vice President, Finance. In November 2004, Bob was appointed Chief Financial Officer and Corporate Secretary. In 2008 he became the Company's Chief Operating Officer. Bob is a Chartered Accountant with a Bachelor of Commerce degree from Queen’s University. Prior to joining Ritchie Bros. he worked for several years with KPMG and held financial management positions in the shipping and television production industries.

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An Interview with Aquaman

Coming to us this month is an environmental entrepreneur from the water industry. With over 70% of the world's surface covered by water and recognition growing of the role that it can play in addressing many of the issues facing modern society, water treatment, preservation and management, is an area that is getting a lot of attention these days. And Edward Quilty is on the leading edge with his company, Aquatic Informatics.

Aquatic Informatics develops and markets software for the water and climate information industry, an industry that may seem rather daunting at first glance. Their customers include, municipalities, engineering firms, universities and state and provincial government who use their easy to run software for a variety of tasks related to maximizing use of this natural resource in safe and conservation friendly ways.

A trained biologist, just shy of his Ph.D. and BC native, Ed started working in the environmental data monitoring industry straight out of university. He has seen massive changes in the industry as weather and climate changes have impacted a variety of aspects of daily life around the globe. The thriving clean tech industry in our part of Canada keeps Ed busy, but he took some time out to talk to us a bit about running a small company, his inspirations and guiding principles.

I found Ed's comments on hiring and managing people to be particularly inspiring. He is not a fan of micromanagement and believes in hiring the right people. All of us who manage people aspire to the same thing, but often are able to achieve it. Ed believes it comes down to hiring people who can believe in the company's core values. A great comment really resonated with me was, "It's amazing how much time and energy can be wasted wrestling the wrong people in the right direction."

I'd never really thought of it that way, but it strikes me as true. As increasingly we look for people both with expertise in a narrow body of knowledge and with the right personality and work style to fit into the corporate culture, it comes down to espousing the same core values. While it seems the pool of talent is great, finding the right fit for any organization takes time and effort.

One of the benefits of conducting these interviews each month comes from learning more and more about running my own small business. My interview with Ed turned out to be a treasure trove. He digs deep down to his philosophical core when discussing core values and how to imbibe that in a corporate culture. He believes in taking opportunities, even if they don't always seem to have a specific goal in mind - the mark of a true entrepreneur.



Who were your early role models and what were the main things you learned from them?

Nearly straight out of University I worked as a contractor for BC Environment. My boss during those few years had an amazing ability to motivate our team, somewhat passively. While other units were micromanaged and stereotypically disengaged, our unit had a real collegial spirit - we were very tight, worked exceptionally hard, and had tons of fun. It was us against the world. My boss's strategy was to hire great people and remove roadblocks for them. I've adopted this approach in my own companies and I think it's been a cornerstone for the success we are now seeing at Aquatic Informatics.

In your opinion what are the key trends affecting your industry?

The environmental data monitoring industry is undergoing radical change. The combination of climate change, growing water scarcity and rapid technological advances is prompting governments and private entities to rapidly modernize and enhance the collection, processing and timely publication of environmental data. Extended droughts in California, Australia, and China, and recent floods in Europe are all good examples of how big the problems can be and the scale and timeliness of the response needed. The industry used to move at a glacial pace whereas now it requires real-time collection of data, and fast interpretation and decision-making.


What is the greatest business advice you've ever received?

Ralph Turfus, a well known local tech entrepreneur, told me to take the time to really understand my own core values and then build a company around them. As a small company, you need to be really efficient and responsive, and therefore you need great team alignment. It's amazing how much time and energy can be wasted wrestling the wrong people in the right direction - I like to save my battles for the competition. So we have made a real push to ensure our core values are living and breathing within the company - they aren't just lip service. They are part of our hiring process and drive our team's 360 degree performance reviews within the company.


If you could redo something in your past, what would it be?

Two things. First, in university I had an opportunity to take an international co-op work term. Instead I chose to stay in BC and continue to build my local contacts and experience - it seemed more practical whereas the alternative would be more fun. In hindsight I should have gone for more fun. Also, I now look at the globe as one market and I think I would have gotten to this mindset more quickly if I had worked abroad earlier. Second, I wish I had finished my PhD before throwing myself completely into building Aquatic Informatics. I thought I could do both but really I needed every second and more for Aquatics. I do intend to complete my PhD down the road, but likely with a new focus.


What is an example of an innovative company that people have never heard of?

There is a really inventive Austrian company called S::CAN (www.s-can.at) that are making waves in sensing technology in the water industry. They have built spectrometer technology into portable and robust devices that can be deployed in situ to measure a large and growing list of water quality parameters, such as dissolved organics, nutrients, and contaminants. In the same way that we are transforming the way our industry can handle massive amounts of environmental data in real-time, S::CAN is transforming what our industry can actually measure in real-time - they are opening big doors and it's really exciting for us.


List a few of your favourite business sites.

www.bctia.org
www.acetech.org
www.gazelles.com

-------------------



Edward Quilty - Founder, President & CEO

Edward Quilty is the founder of Aquatic Informatics. Ed has worked in the water industry since 1992 and has specialized in automated monitoring, data management and assessment, and environmental impact assessments. Prior to founding Aquatics in 2003, Ed was principal of QA Environmental Consulting, a regional firm focused on designing and managing hydrometric networks. Mr. Quilty is a registered professional biologist with the British Columbia College of Applied Biology, is a Director of the Canadian Water Resource Association, is a member of the Canadian Meteorological and Oceanographic Society and the American Water and Wastewater Association. Ed is also an active member of ACETECH and BCTIA, technology associations focused on rapidly growing British Columbia companies.

The Soul of the Entrepreneur

Despite the plethora of degrees, honors and accolades, this month's guest is a down-to-earth guy. Andrew Csinger, Entrepreneur in Residence at the University of British Columbia, is an engineer at heart and a man with a wide variety of interests, some of which he shared with us in this month's interview.

His keen ability to look into the impact of technology on society marks him as not your typical computer science Ph.D. As such, he has a wide-range of projects in the works as diverse as his new book, Talent and Treasure, a look at the soul of an entrepreneur and expounding on the cross currents of miniaturization and mobilization.

It was this last that caught my eye. As cell phones become ubiquitous, nearing 100% in most developed and many developing nations, the opportunities for business as well as, personal use lag behind. We've only just begun to explore the mobile platform. As our guest notes:"... the impressive technology-based business advances of the last two decades (will) seem like antique slow motion."

Much of what will drive this trend is "miniaturization". This is, of course a trend that we should realize will drive growth in cell phone capability, as it has driven technological advances in everything form early radios to computers. Every new technology in this and the previous century has morphed from a room-sized apparatus to fit into your hand, each ever more rapidly.

Where does this take us with cell phone technology? It has taken 10 years or so to get from suitcase-sized "bag phones" to credit card sized "cell phones". Much of the focus has been on developing applications and... training users how to take advantage of all this new technology. Will it take a Mac type breakthrough to get us over that barrier in mobile technology, as the easy to use Apple interface revolutionized the PC in 1984? Only then, perhaps, miniaturization can take over and drive further growth.

We need only look back into Dr. Csinger's list of role models to see that he expects an big thinker to lead the way in this quest. His list is an eclectic group of inventors, businessmen and philosophers. He references Albert Camus (I’m not the weirdest person on the planet) as well as, Buckminster Fuller (If it can be imagined, it can be designed; if it can be designed, it can be built)

It is in this last statement that we find the kernel of an idea, one that is yet to manifest itself, except in laboratories and universities across the globe, as well as, in garages and increasingly in the new home of the entrepreneur - Starbucks.

This soul of the entrepreneur, which Andrew Csinger certainly has, makes his comments an interesting read. I'm sure you'll enjoy them as much as I did.


Q: Who were your early role models and what were the main things you learned from them?

A: Buckminster Fuller: if it can be imagined, it can be designed; if it can be designed, it can be built. Bertrand Russell: there must be a logical explanation. Albert Einstein: things are not what they seem. Bill Gates: it helps to be in the right place at the right time. Steve Jobs: It's not JUST about the money. Albert Camus: I'm not the weirdest person on the planet. Warren Buffet: Quality Counts. Zen and the Art of Motorcycle Maintenance: Quality Counts All The Time. A mentor at IBM Labs during my early University days: "Winning isn't everything. It's Everything." One of my academic supervisors on the occasion of a conference trip: "Don't drink the water and bring plenty of toilet paper." Often repeated by great men over the centuries in all walks of life: "Stand on the shoulders of giants." This is how you learn. This is how you build great buildings, great people, great companies.


Q: What key trends do we need to be aware of?

A: Miniaturization has found its match in mobilization. The intersection of these trends will make the impressive technology-based business advances of the last two decades seem like antique slow motion. Huge personal empowerment is coming to a mobile platform near you, if we don’t screw it all up with trade embargoes and war, and that sort of thing.


Q: What inspired you to create Talent and Treasure?

A: The public is mystified by the entrepreneur. I'm an entrepreneur, working with entrepreneurs every day. Although I'm also still mystified, I'm in a good position to shed some informal but credible light on what makes them tick. There's lots you can read about the Entrepreneur, lots of academic theories and biographies, but nothing in the middle, nothing that speaks to the soul of the entrepreneur. This book tries to capture, mostly through portrait photography and short interviews, that which defines the entrepreneur. We all want to know. And in this tumultuous global economical roller coaster, we all need to know...


Q: What did you learn in the process of putting together this book?

A: That executing on a concept like this is an entrepreneurial undertaking. That I'm still an entrepreneur :-)


Q: List a few of your business sites.

www.mobioidentity.com
www.minesense.com
www.sparkintegration.com
www.crowdfanatic.com
www.plantiga.com


Andrew Csinger has held a variety of executive management roles and advises senior management on technology transfer, market and corporate development, and mergers and acquisitions in the high technology arena. He holds several patents.

Dr. Csinger is Entrepreneur in Residence at the University of British Columbia, and Adjunct Professor in the Cognitive Systems Group, where he divides his attention between fostering a culture of entrepreneurialism and lecturing on the subject of Digital Trust. He is advisor or director to a number of local startups including Cryptolex Trust Systems (www.cryptolex.com), Scalable Analytics (http://www.scalableanalytics.com), CrowdFanatic (www.crowdfanatic.com) and Spark Integration Technologies (www.sparkintegration.com). Andrew was recently EVP of Product Strategy and Development at Dategrity Corp., a spin-out from the Votehere Corporation, where strong privacy technology is being developed to meet rapidly emerging compliance needs and enablement opportunities.

Andrew was Senior VP and CIO of Group Telecom from 1998 to 2002. GT's successful initial public offering took place in March 1999. During this period, GT became Canada's most successful Competitive Local Exchange Carrier, with 400,000 kilometers of fibre, 1500 employees in offices from coast to coast, a quarter billion revenue run rate and over a billion dollars in financing.

In 1998, he developed and operated the first PKI Certification Authority and Repository to be licensed under Washington State Digital Signature legislation. This seminal work influenced the later adoption of federal U.S. law (the Electronic Signatures in Global and National Commerce Act of 2000, or "E-Sign Act"), and was an early model for the adoption by other states of the Uniform Electronic Transactions Act (UETA).

In 1996, he founded Xcert Software Inc., a technology leader in the emerging business of Public Key Infrastructure (PKI). Xcert was acquired by RSA Technologies Inc.

Andrew received his Ph.D. and M.Sc. in Computer Science from UBC and a Bachelor's degree in Electrical Engineering from McGill University. A Natural Sciences and Engineering Research Council (NSERC) Post-Doctoral Fellow at Simon Fraser University, and a visiting scholar at the German Center for Artificial Intelligence in Saarbrucken, his work on artificial intelligence techniques has appeared in journals and conferences around the world. His research focused on user-modeling by computer in intelligent multimedia interfaces.

Dr. Csinger is regularly invited to speak at conferences and events, about technology and its effects on society and business.

Moving at the speed of molasses - Interview with Mike St. John

By Peter Roosen

Freight trains and toilet paper have a lot in common when looking from a marketing perspective. They are examples of products that have been around long before we were born that will still be around long after we are gone. They are among the 95% of the things we see and use that are considered established products and services from traditional industries. You won't see them featured in media because they are simply part of the landscape.

Marketers can easily lose sight of everyday products and the marketing opportunities related to them. This is especially the case for stove-pipe industries that produce the many industrial goods and services that form the backbone of our modern industrial economy. The highly popularized electronic gadgets that entertain and keep us in contact do not exist in a vacuum. Most of them are brought to market on the backs of those freight trains that trudge back and forth across the landscape virtually unnoticed. And let's face it, the only time anybody notices toilet paper is when there isn't any.

This month's newsletter takes a look at a great marketing and innovation example from the very traditional lumber industry. Marketers be warned. Making a big splash in a traditional industry isn't an easy thing to do. Last week, we traveled to Boise, Idaho to interview someone who has done just that - in spades - and who continues to do so. Former navy seal Mike St. John was the marketing man behind the shift to engineered structural residential building products from the basic sawn timber that has been used for centuries to hold our floors and roofs together.

Mike has over 32 years selling and producing these structural building products that involve efficiently using the whole tree rather than just the pieces sawn out from the middle to make our buildings. Introducing Trus Joist products was the highlight of his career. These products now have approximately 50% market share and are still growing. At the start, 1976 sales were less than $1 million, and today sales of over $2 billion are made annually. Mike is currently a board member for the APA (American Plywood Association) and he is chair of the EWS (Engineered Wood Systems) committee. He is also a director for Pacific Woodtech Corp. www.pacificwoodtech.com where he also serves as vice president of sales and marketing. Mike teaches courses on marketing and innovation to engineers while remaining keenly interested in these areas.

The road to successfully transforming an industry is not an easy one but Mike is someone who has traveled this road and is happy to share his insights for those of us who are undertaking a similar journey. You'll gather from our interview that there are some key ingredients that can be used to help transform any industry where a good idea's time has come.


Interview with Mike St. John.

Q. Who would you hold out as an inspirational leader?

A. Harold Thomas and Dick Hansen are two who spring to mind immediately. Harold is still alive while both were highly influential from our beginnings in the 1970s. I'll focus on Harold who is a salesman who started a company. He always believed and still believes that if you give salesmen an opportunity to make money, they will perform. The good ones will sort themselves from the rest. When I was vice president of sales, there were more than 300 salesmen of which 250 made more money than executives and managers. We celebrated that. We truly had an organization that the head of was a salesman's champion.

Trus Joist would not be alive today had it not been for the sales guys. The products were very expensive compared to traditional methods.

Q. How were you able to get such expensive products into the market?

A. I had an important accomplishment back in the early days. It was in Colorado at a time when there were fancy ski resorts being built that needed very large roof trusses that if made using conventional materials and methods were too big and difficult to truck through the highway tunnels. At the time, we were just making floor joists. I figured that since we could make these engineered pieces in any length, they could make great trusses while being relatively easy to transport. It worked.

Q. What drove you and your team?

A. We were and still are on a mission to build better homes.

Q. What do you see as the success drivers for successful innovation in a traditional industry such as yours?

A. You need to be truly committed to the idea. Beyond that, execution is important. In my experience, the long term follow up gets bound up in financial performance numbers. So many underestimate the time and cost of doing the execution - even in a traditional lumber business which is like watching molasses flow. It took 30 years to get 50% market share. Sometimes great ideas take that long. A $2 billion market is all it is in our case. Initially we were 5 people going after this market.

In some industries some great ideas, no matter how great, have very slow traditional speed. This is unlike ipods, cell phones and other tech products that move at the speed of light. The backbone of all commerce in the world are still ugly traditional products like sheet rock, timber, steel, petroleum and rubber. These are traditional businesses or products that just don't move as fast.

I've always been envious of the computer and software guys who build extinction into their model. If you buy a computer today, it will be gone in a couple years. If you buy an I-joist today, it will still be around and you'll be able to buy one 25 years later just like the one 25 years before. I've had three Blackberries in two years because they keep advancing. Take the two by fours in my house. I could have bought the same ones in the mid 1800s.

The big lessons are having great patience, deep pockets and making sure the traditional products and industries evolve so that we don't lose our planet. Today we plant 23% more trees worldwide than we take. But not all countries are on side. Hardwood from southeast jungles are an exception as they are stripped for cash - as our northern lands not so long ago. The lumber business can outgrow demand but we have to do it right. Switzerland, Finland and New Zealand have been doing a good job and are able to grow more than they demand. The lumber business takes a huge amount of carbon out of the atmosphere.

The innovation gets down to using every bit of the wood fiber from the tree. Today, in North America, we don't waste a single ounce of wood fiber. The forest products group as a whole has really figured out how to preserve itself through sustainable practices.