Interstate Steel
Maintain a high level of integrity.
Howard Conant suggests that the two most important leadership techniques are thinking outside the box and maintaining the highest level of integrity.
“When foreign steel was shipped all the way to Chicago, there were frequent insurance claims for damage where rough seas and inadequate packaging caused sea water to enter holds of vessels and damage cargo. While many of our competitors would submit claims that were artificially increased, anticipating compromise settlements, our claims were for precisely what we thought the damage to be.
“After our integrity was established and adjusters determined that our claims were fair, word got around that we could be trusted. The time spent settling claims was reduced to almost nothing, allowing both insurance adjusters and us to utilize time more advantageously.
“While I was chairman of Interstate Steel Company, in about 1985 we called on Hirsh Manufacturing Company, a manufacturer of steel shelving that recently had been doing a fairly large volume of sales for a small company—perhaps $40 or $50 million—but with extremely modest earnings, close to break even. Their credit lines were very limited from other steel suppliers because of their inadequate working capital and mediocre profits.
“The executives operating the company were straight shooters. I got good vibes when I met them. Our idea was to transform their steel buying from buying odd lots from distributors to supplying prepainted coils ordered to their precise specifications.
“I was so confident that this revised buying would improve their efficiency and reduce costs enormously that we set up a $2 million credit limit with a backup supply of another $2 million. It proved out and they became a $20 million annual account, with payments consistently on time. Since our competitors would not extend more than about $50,000 or so credit, this move was really out of the box. It worked.
“A person can become a better leader by honoring integrity. Succumbing to short-term temptations is likely to produce short-run gains, but long term, more severe negative results.
“Out-of-the-box thinking can be developed by examining traditional methods, or tradition itself, for validity. Encourage thinking creatively, even if some solutions at first sound goofy.”
As a final thought, Howard offers these words from Socrates: ‘The unexamined life is not worth living.’