Strategic Exchange - January 2010

By Kemp Harr

Well known author Stephen Covey has studied leadership and success over the past 200 years and discovered a very troubling pattern. What was important to leaders for the first 150 years of his research and what’s been important in the last 50 years are much different. For the first 150 years, leaders were focused on their character—attributes such as integrity, fidelity, courage, compassion, contribution, responsibility and justice. But in the last 50 years, leaders have been more focused on what Covey calls the personality ethic. They are more focused on techniques than principles.

Bob Corker, the freshman U.S. Senator from Tennessee, told a small group of business people during the Thanksgiving recess that the current leadership, in both houses and on both sides of the aisle, is the most self centered group of individuals to ever lead in Washington. They’re more interested in their own agendas than the collective good of the nation, but this attitude is not confined to Congress. Three names in the news recently, Democratic Senator Ben Nelson of Nebraska, Republican Governor Mark Sanford of South Carolina, and pro golfer Tiger Woods, are three great examples of this erosion in leadership character.

Covey goes on to teach that the highest level of maturity is a realization of interdependence – the attitude of we. As we bring in the New Year, we should all commit to being part of the solution instead of part of the problem. We need to resolve to commit to being like the leadership that built the foundation for many of the great freedoms we enjoy today. Focus on the right character attributes and recognize the interdependence of your family, friends and the people you work with.

Softer with a Lifetime Warranty
I’ve got to hand it to the three carpet giants when it comes to consumer positioning in 2010. Consumers buy carpet because it’s soft, and their number one concern when considering carpet is cleaning and maintenance. In 2008, when the Carpet and Rug Institute polled consumers about purchase criteria for carpet, the number one attribute was comfort and warmth and one of the top concerns was maintenance and clean up. DuPont surely recognized the cleaning concern when it chose Stainmaster as the brand name for the residential nylon carpet fiber that it spent millions to promote.

Much of the hum lately about carpet fiber is coming from Beaulieu of America and Shaw Industries, who are rolling out new lifetime stain warranties on their nylon 6 and polyester carpet fibers. They’re also rolling out new softer fiber technology: Mohawk led this lifetime stain warranty phenomenon last year on carpets that feature Smartstrand triexta fiber and Everstrand polyester fiber. But it has not extended that program to cover nylon. All three of the big mills require routine cleanings to qualify and all of these lifetime stain warranties are transferable and non prorated but they do require that you hang on to all your receipts, which is something many consumers don’t do.

Price Increases
It looks like price increases on flooring products for 2010 are inevitable. All three of the major carpet mills mailed notification letters in late November and early December calling for 4% to 6% increases effective early this year. Also, hardwood lumber prices have risen substantially in recent months due to a limited supply of sawmills as well as adverse weather conditions, which limit the ability to harvest trees. There’s no denying that manufacturing volume remains soft, especially during the seasonal low point of the year. With raw material prices going up and fixed costs having to be spread across fewer goods, price increases are inevitable. The only silver lining is that it’s been so long since most consumers have bought flooring that most won’t feel the increase.

Mohawk 2010 Convention
One of the overriding themes during Mohawk’s annual convention held in San Antonio, Texas in early December was “turn the page,” which very appropriately communicates the emotional need to forget the pain of 2009 and focus on preparation for market recovery. All of Mohawk’s Floorscapes and Color Center Elite aligned retailers were invited to attend this four-day event and an impressive investment was obviously made to show these roughly 750 retailers how much they mean to Mohawk’s business.

I’ve attended these meetings every year, but this one by far stood taller than previous years. This caught me by surprise because I expected the same level of conservativeness we’ve seen at some of the other industry meetings that have been justifiably smaller due to the unprecedented three year economic decline we’ve all experienced. And we need to factor in that this was the first time that Mohawk had pulled these two groups together, which might have allowed the company to pool its resources and spend more at one time. Nonetheless, the magnitude of programs was impressive.

There was a vast number of new product programs and product enhancements. They included a whole new collection of Wear-Dated branded nylon carpet styles in a 40 color assortment featuring an even softer hand, a new hardwood display called the Easy Selection Center, and improvements to its laminate edge system and ceramic tile printing process. But what really stood out was Mohawk’s commitment to develop these retail partners through training and motivation sessions. On hand was a full curriculum of classes. Ken Blanchard, author of the One Minute Manager, and his support staff, were invited to motivate and teach how to close more sales, and Stephen Covey’s team was invited to talk about the management style of highly successful people. There were also sessions on financial planning, and understanding your employees’ personality styles, all of which should make these retailers more successful. And lastly, to make sure the training is not a one time event, Mohawk plans to take this curriculum on the road on a 14 city tour throughout the remainder of the year.

A Compassionate Industry
Fortunately there are people in this industry who do have the character traits that Stephen Covey’s research showed were on the decline. These leaders understood compassion and contribution and saw the need to start a foundation that would help anyone in our business who is struggling with a catastrophic illness or a life altering disability. We should be proud that our floorcovering industry not only started this foundation but also continues to fund it.

Now, over 20 years later, more than $2.5 million has been granted to needy individuals who otherwise would have no means of keeping their dignity and paying their medical bills. Each year, the Floor Covering Industry Foundation provides assistance to a long list of individuals, ranging from as few as 16 to as many as 45 per year. Funding comes from contributions made by many of the manufacturers and other groups throughout the industry and from the annual golf tournament held each fall in Georgia and bearing Alan Greenberg’s name. My hat goes off to Walter Guinan (the former president of Karastan) and the other founders of this philanthropic organization and to the people who fund it with their charitable gifts. Anyone interested in giving or applying for assistance can find more information about the foundation in this issue on page 48.

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.

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