Sunday, August 07, 2011

The Zack Lesson

Freedom and Success
Self Governance and the Sovereign Individual
The Zack Lesson
By Stephen L. Wilmeth

      In 1986, a small farming company emerged on the landscape of the San Joaquin Valley.  It had the outward appearance of a California operation, but its roots were not indigenous of that state.  Its character was founded upon the lessons and historical underpinnings of West Texas and New Mexico.
     A frame of reference to the early personality of the company was the subtle criticism offered in a staff meeting of a major corporate farming company based in Bakersfield just prior to the founding of the new operation.  The comment had been leveled at West Texas cotton farmers regarding their image of homespun complacency. 
     A less than diplomatic response had been offered that California agriculture could learn a thing or two by emulating those Texans.  After all, they just might be the best farmers in the world.  Anything less would have seen their collective failure years ago.  The conditions under which they farm, the absence of surface water, and the nature of the products they produce all contribute to razor thin margins.  They simply have to be good to survive.
     Pickups and Gooseneck Trailers
     The fledgling company attempted to mimic the characteristics of those Texas operations.  It became a matter of pride that divisional managers within the company could help diagnose an engine problem in a tractor in the middle of a vineyard, set a disk as well as anybody, or speak Spanish nearly as well as any farmer in Tornillo.  It became a 24 hour operation with pickup trucks pulling gooseneck trailers loaded with implements or tractors from Livingston to Maricopa. 
     Along the way, success grew.  Larger and more expansive farming units came into property portfolio.  With the success, it was easy to fall into the trap of assuming that standard approaches should be universal, but I found that not to be the case. 
     Rio Seco
     A large farm that came into the portfolio was the Rio Seco Ranch west of Kerman.  The farm manager that came with the property was retained.  He and I worked diligently to find common ground, but those early days were not without strife.  We disagreed on many things. 
     The approach and our manager interpersonal relationships elsewhere were as comfortable as they were successful.  My attempts to duplicate them at Rio Seco became a very discouraging process.  Things just weren’t working.  It all came to a head one day when I visited the farm unannounced on a Sunday.  The outcome was a confrontation that can be judged from a current day perspective as the turning point in my own management philosophy. 
     In the discussion, the manager suggested that my insistence for consistency in each and every divisional approach disregarded personalities and conditions that have evolved in geographic spread of our farming operations.  He struck a nerve with me and we walked away with the agreement that I would offer him a wider degree of authority predicated on his adherence to the established budget and yearly plan.  It proved to be a winning combination.
     The Rio Seco lesson became so profoundly important that thereafter I limited the interaction between the divisional managers.  When we did meet as a group we discussed longer term planning issues or issues that created unity rather than division.  I never made them sit there in a meeting and regurgitate what they were doing. That was their business, they didn’t have to sit in judgment amongst themselves, and it was something that each would discuss with me in our weekly visits. 
     Reduction of risk
     Before long, I didn’t want those managers knowing what their counterparts were doing.  I wanted them to be making decisions on what they were seeing and mapping not what somebody else was doing.  If we were wrong, we didn’t need to be wrong everywhere.
     The approach was not something our board agreed upon initially.  In fact there were some heated discussions regarding that approach.  What kind of farming company would want to buy different equipment in every division?  Why would a farming company buy used tractors? 
     We did it because our managers were given the latitude to shape their own battle ground predicated on vested commitment to the yearly plan.  The results were nothing short of astounding.  That farming company, Met West Agribusiness, led, for many years, the entire universe of subsidiaries of Metropolitan Life Insurance Company in earnings to total investment.  For a time, we were the darlings of the Met world.
     The equipment difference
     Success allays many differences of opinions, and the equipment evolution at Met West is one of the best examples of managerial sovereignty across the company.  It became one of those exercises in unity rather than division.  In our Del Rey Division, the manager ran green equipment.  He never wanted or needed new equipment.  He might not have the most tidy equipment yard, he might have an exhaust stack wired into position, but his division made money, he made money in his incentive successes, and his equipment budget was the lowest in the company on a per acre basis.
     At Arvin, the manager operated equipment like it was a necessary evil.  He was a very technical farmer.  He was more intent in perfecting a pruning technique or elevating “typiness” in apples than having to keep diesel in inventory.  His tillage equipment was green and his harvest equipment was red.  His emphasis was in the tree and what it took to grow fruit, and his division made money for the company.       
     At McFarland, the New Mexico raised manager ran red equipment.  Nobody could cover more ground than he did.  Many farmers will replace discs on a disk only a couple of times in their lives.  He often replaced a set of discs within the farming year.  That meant he was pulling close to 10,000 acres on each unit between disc changes.  His yard became dynamically efficient if not picture clean.  He made money in his incentive successes and his division made money for the company.
     The most organized farm manager I’ve ever known ran our Madera operation.  His heavy tillage units were green and his harvest fleet was red.  Everything was parked on a string, everything was freshly painted, his equipment costs were extravagant, but he made money in his incentive successes, and he made money for the company.  If we had to show the farm to anybody in the world with no notice, we knew his operation would be sparkling.     
     The Rio Seco manager was with us for three years and we formulated a respectful relationship.  He had a rag tag equipment yard that was efficient at the field level, it was moderate in terms of cost, and it was reliable.  He proved his point to me in more ways than one, and . . .  he was right.
     The boardroom evolution
     Once the emphasis of detail was exchanged for the mutual commitment of the yearly plan, the board became in sync with the strategies played out in the field.  Budgets were created by divisional history and they varied greatly.  Fairness was not an issue. Results were.
     When Leo Rasmussen became our Chairman his management style enhanced what we were doing.  He was tough, but he, too, relied on the sovereignty of the individual decision maker to operate the company.  Once a budget and a plan were in place, it was our responsibility to get it done.  He expected to be kept in the loop, but he didn’t want to make ongoing decisions.  He would tell us if he had to make those decisions, he would get somebody else.  Time and again, he would lean across the table to us and remind us that if we did not hit our marks he would sell the company.  What a tyrant you might think?  On the contrary . . . he made us trust ourselves. 
     The Governmental disconnect
     The Zack lesson taught me a valuable lesson.  That Sunday long ago awakened me to what free men could do if they are entrusted to perform a task they have a vested stake in achieving.  It also demonstrated that the closer to the point of engagement sovereign decision makers are allowed to operate, the more spectacular the results. 
     Our Founders knew that from experience.  That is not the case of our modern leadership.  Our federal leadership has not only failed to learn that from actual experience . . . they have formed the modern counterpart of the very tyrannical rule from which our Founders elected to liberate themselves.  That must change. 

Stephen L. Wilmeth is a rancher from southern New Mexico.  “Consider how often we are outraged by issues that we are forced to defend, but we have no ability to influence.  If those issues were dealt with in the reverse of our federal system today . . . from bottom up rather than from top down we would have much more influence . . . and a much different perspective.”       

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