COVID-19 has been disruptive, to say the least, but it has also allowed companies the opportunity to rethink their operation. Count HVACR distributor ACR Supply, Durham, North Carolina, among those who shifted their business model during the pandemic and now expect to emerge stronger than ever — and ready for the next chapter.
As COVID-19 began ravaging the economy last spring, the family-owned, regional business saw an opportunity to reposition itself for an evolving marketplace by making some strategic organizational changes. Not only did the slowdown give ACR Supply time and space needed for an overhaul, but also the company was coming off the heels of a recently completed succession plan. This was the logical next step.
ACR Supply’s president and owner, Troy Meachum, who took over the family business from his father, L.C. Meachum, back in the ’90s, decided 2020 was time to implement a new business management process he had been hearing about from some of his distributor friends and through his affiliation with the HVACR trade association Heating, Air-conditioning & Refrigeration Distributors International (HARDI).
The tool that many of his colleagues had been championing — even before the pandemic — was the Entrepreneurial Operating System (EOS), outlined in the popular business book Traction by Gino Wickman. EOS was designed for a company’s leadership team to improve in three areas:
1) Vision — “getting everyone in your organization 100% on the same page with where you’re going, and how you plan to get there”;
2) Traction — “instilling focus, discipline, and accountability throughout the company so that everyone executes on that vision — every day”;
3) Healthy — “helping your leaders become a more cohesive, functional, healthy leadership team.”
Meachum, who had helped lead ACR Supply to 10x revenue growth over the past 20-plus years, had recently begun thinking about retirement and leaving the company in good hands for the next generation. He decided it was time to finally bring new processes and a new vision to ACR Supply so the company could continue on that growth trajectory after he was gone.
“We were getting — and have been getting — much bigger than Troy Meachum,” he says. “The only limiting force to our company has been me for a while. My dad always taught me to hire people who are smarter than you are, and I’ve been trying to do that.
“We’ve got a lot of wonderful, young, talented people. But the one thing they needed was the opportunity to spread their wings and be able to use the skills and gifts that God’s given them so that the company can be successful in the marketplace.”
Pandemic Proved the Perfect Time to Pivot
With this goal in mind, and with a succession plan recently created to ensure ownership of the business would be taken care of after his departure (from the company or this Earth, he says), Meachum used the principles of Traction to first reshape ACR Supply’s leadership — starting with himself. Meachum moved from president to CEO, and he installed Mark Bray as the company’s president, or “visionary,” as the book calls it, and Corey Salyards as the COO, or “integrator.”
It wasn’t just the top positions that got a refresh. Other changes that ACR Supply announced: Brian Bushelow became the director of supply chain, Aaron Coon became the director of the engineering products group, Jeanne Brzezinski became the director of finance and Justin Vaughn became the controller.
Some senior leadership roles didn’t change within the new structure, including Wayne Bullock as the director of operations, Rodney Smith as the director of sales and Kevin Parsley as the director of marketing.
It was the pandemic that made these changes possible, says Bray, who had served as ACR Supply’s supply chain director for years. COVID-19 — as devastating as it was for the economy, many of ACR Supply’s customers and even the company itself — allowed ACR Supply to rethink its go-to-market strategy, its business relationships, even its corporate vision.
“COVID-19 created a sense of urgency to improve and figure things out faster,” Bray says. “We knew we had to make changes, we knew we had to do something differently. The way that Traction is set up, it allows us to communicate at a higher level, so it just made sense.”
With normal business operations upended if not shut down, the team had time to read Traction and begin implementing some of the book’s tenets, like holding weekly “Level 10” meetings and developing “rocks,” or priorities, for the coming 30, 60 and 90 days. The team bought in immediately.
“We wanted to do it the right way and not do some sort of hodgepodge version,” Salyards says. “The senior leadership team rallied around it after they saw the benefits that it was going to bring.
“I’ve been meeting with all of the other leadership within ACR Supply, and everybody thinks that it’s going well, everybody thinks the communication’s at the highest level it’s ever been within this company. We’re all excited about next year, watching what it’s going to look like, what it’s going to do for our organization.”
EOS helped ACR Supply navigate COVID-19 on a critical front. Because it advocates for 90-day planning instead of annual planning, and due to the world continually being disrupted — different states enacting different safety measures, customers changing or canceling orders, etc. — the shorter goal-setting timeline proved beneficial for adapting to the upheaval.
“COVID made us realize that all of our annual plans that we set up in December for January through 2020 were thrown out the window,” Salyards says. “Being nimble, staying on the balls of our feet and wanting to move quickly and make decisions in a quarterly fashion, that seemed to make sense during COVID.”
Using EOS to Improve Customer Relations
ACR Supply announced the changes to its customers and vendors last fall, half a year after Meachum approached Bray and Salyards about the impending changes back in March when the pandemic began raging.
At its highest level, certainly above the newfangled titles and leadership seat changes, EOS helped ACR Supply improve its communication — both internally among employees but also, more importantly, with its customers. ACR Supply’s leaders said they are already reaping the benefits of implementing EOS into its daily operating procedures, and while it’s been hard to pinpoint a specific return on that investment, the company believes its ability to quickly find and solve problems has been game-changing.
“We identify problems much faster,” Salyards says. “We had quarterly and monthly meetings before, but they weren’t always with the same groups. Because we now meet weekly, issues are distributed much more fairly, much more easily, among groups. If a sales team sees something that the operations team needs to work on, or vice versa, the problem gets solved much faster.
“As for our customers, if they had an issue, it might have taken us a month to get it solved. Now, it’s getting solved much, much faster. Our customer service level is much higher.”
As the CEO and owner of ACR Supply, Meachum likes what he’s been seeing from his team, including how quickly problems get solved but also how accountable each team member has become when issues arise in the weekly Level 10 meetings.
“The silver bullet in Traction has been frequency and accountability,” he says. “We’re talking about these things frequently — at least weekly, if not more often — and everybody’s hearing the same messages and so everybody’s held accountable. Our speed to decision and action is probably better than it’s ever been. In turn, I think the customers will benefit from that as a result.”
ACR Supply has even been inviting outsiders to watch their Level 10 meetings and the company plans to have customers sit in to see how the company works, though Meachum says they will be careful to exclude sharing any sensitive customer data during those meetings.
“We love helping people get better,” he says. “So many people have helped us over the years, so we want to help our customers get better. As we get our feet on the ground, we’ll make this a routine — something that’s part of our DNA, our second nature — and we’ll start involving customers to show them how we do what we do. Hopefully, they can also get better.”
Bray says while ACR Supply hasn’t assigned any particular revenue growth goal specifically to Traction — to be fair, he adds, the pandemic has altered forecasts anyway — the company fully expects top- and bottom-line improvement as a result of the new organizational structure. With enhanced customer service, ACR Supply projects improved customer retention and wallet spend.
“This time next year, I think we’re going to be executing on our strategy better than we ever have ever before at ACR Supply,” he says. “I think that we’re going to be able to budget better, plan better and adapt to changes more quickly than we’ve been able to in the past. We’re going to be able to home in on our strategy and get information spread and shared more quickly than we’ve ever been able to do.”
The Importance of Culture and Succession
Though EOS has proved beneficial to ACR Supply during the last nine months of the pandemic, the company sees this model — and specifically the promotion of upcoming leaders — as key to its long-term success.
It aligns with ACR Supply’s company culture, which MDM documented in a 2017 article, “Millennials in Distribution: Culture Trumps Everything.”
Meachum said the leadership team’s commitment to actively recruiting, hiring and grooming millennials for leadership positions is a way to not only engage a younger workforce but also reach a new generation of customers.
As he told MDM for that report, ACR Supply’s culture includes hiring for a candidate’s potential rather than merely their distribution background. Meachum credited author Patrick Lencioni for describing the perfect employee for ACR Supply: one who is humble, hungry and smart – a phrase Meachum discovered when reading one of Lencioni’s earlier books, The Four Obsessions of an Extraordinary Executive.
“That’s the ideal team player,” Meachum said at the time. “That’s what we’ve been trying to recruit for years. If you find a young person that’s hungry, they have a desire to grow and they’re humble as well as people-smart, we can teach them what we know and what we do. We can train them in what we do.”
That culture of creating opportunity — for both veteran employees and newcomers alike — has paid off not only for ACR and not only for Meachum himself but also for the company’s younger employees like Bray and Salyards, both of whom came up through the ranks hungry and looking to grow. Now, they work as the president and COO, respectively, of a distributor that generates annual revenue of well more than $30 million with lofty growth goals this year and beyond.
“I’ve told people over the years that if you come to ACR Supply and you contribute to the profitability and the culture every single day, if you keep doing your job and you do it well, if you bloom where you’re planted, opportunity will come,” Meachum says. “That’s exactly what happened for Corey and Mark.”
Meachum, who has been thinking about the business “after I’m gone,” says he likes the way this new system dovetails with ACR Supply’s succession plan he and his wife forged in the last couple of years. It speaks to something that many distributors have put off for various reasons but which has become vital in these uncertain times.
“It’s difficult because people don’t want to talk about that,” he admits.
But Meachum clearly understands that preparing his company, which his dad formed decades ago, for its next chapter is crucial for his family’s legacy, of course, but mostly for the employees who have bought into his vision both then and now, and who want to make it their own. And the foundation for that future was solidified during the shakiest of times.
“I say all the time — part tongue-in-cheek and part serious — my team and my family will be a lot better off with me dead,” he says. “Everything is in place. Every single ‘t’ is crossed and every ‘i’ is dotted. Our succession plan, if something happens to me, means we know exactly what to do moving forward — even more so now with the structure we have in place.”
Editor’s note: ACR Supply President Mark Bray serves on MDM’s Editorial Advisory Board.