Profile of how Granite Rock Company stays ahead of the competition.
Like most companies these days, Granite Rock was threatened by new andbetter-funded competitors. So it created an organization that consistently staystwo steps ahead of its adversaries
Entrepreneurs rarely have trouble naming their companies' competitive advantage. Our product is unique. Or, No one can touch our service. Or maybe, We're the low-cost producer, so we have the best price. Everyone running a business knows the homely truth: a growth-oriented company needs some kind of edge on the competition.
What everyone doesn't know is how to maintain that edge over time. Cast a skeptical eye on your own company. Maybe you've been growing, even in the current slowdown. But what prevents competitors from bellying up to your table, elbowing you aside, and scarfing up your dinner? (Not to mention scarfing you up for dinner.) Perhaps they're already developing something dazzlingly new and different. More likely, they're learning to do exactly what you do. Only better.
A few years ago a handful of managers and theorists began asking what had to happen inside a company so it could adapt to changing conditions -- so it could keep its competitive edge or develop new ones as attackers gained ground and markets shifted. The nation's business schools soon were buzzing with phrases like the adaptive company and the learning organization. "The ability to learn faster than your competitors," proclaimed a manager quoted by MIT's Peter M. Senge in The Fifth Discipline, "may be the only sustainable competitive advantage." Such was the emerging wisdom.
But most of the pronouncements on competing by learning remained dolefully abstract because the thinkers had a hard time finding companies that really were learning and adapting effectively. Senge's book -- subtitled The Art and Practice of the Learning Organization -- was long on theory and hypotheticals, short on real-world examples. Fortune columnist Walter Kiechel III, in a perceptive report on adaptive companies, argued that organizations such as Honda and Quad/Graphics, the Wisconsin printing company, were on the right track. But "the trouble with the learning organization," he acknowledged, "is that as yet there's no real-world example that completely fills the bill."
OK. Inc. herewith announces an end to the search. Mr. Kiechel and Mr. Senge, meet Bruce W. Woolpert. In fact, meet Wes Clark, Rita Alves, and all the other managers of the Granite Rock Co., of Watsonville, Calif. Meet Ray Morgan, who works up at the quarry, and Ken Nabal, who runs one of the batch plants. For if you or any of your readers ever wanted to see a company that learns as it goes -- indeed, that carries learning to ridiculous extremes, all in the name of maintaining its edge on the competition -- that company is Granite Rock.
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At first glance, granted, you might wonder what's to learn. Especially in this commodities industry and especially for a smart guy like Bruce Woolpert.
Granite Rock's businesses are, well, earthy. The $90-million company produces and sells crushed stone from a quarry in nearby Aromas. It mixes concrete and asphalt (using stone from the quarry) in 17 batch plants, delivering them to job sites within a 100-mile radius of Watsonville. It sells building supplies at retail; it runs a highway-paving operation. Woolpert's grandfather founded the company some 90 years ago, and it has remained under family control ever since.
Bruce and younger brother Steve took over in 1987 as joint CEOs. Steve had been with Granite Rock for several years already; he would be in charge of land acquisition and long-range resource planning. Bruce had a rather different background. An economist and mathematician by training (UCLA, class of '74), he had finished first in his class at Stanford Business School. Then he put in eight years at Hewlett-Packard, eventually running a small software division. Now his job would be operations chief of the family business.
But it turned out that Bruce and everybody else had plenty to learn. As with a lot of U.S. businesses, the sands of the marketplace were shifting under Granite Rock's apparently solid position.
For decades, the company's competitors had been other family-owned companies, all with a few hundred employees, all doing business in much the same way. Now some of those competitors were selling out -- and the buyers, in the new global economy, included some deep-pocketed giants.
For decades, too, Granite Rock had been unionized. Yet the construction-supplies industry -- like construction in general -- was more and more nonunion. Nonunion suppliers paid their employees less, on average, and weren't bound by restrictive union work rules.
Several other changes were showing up on Woolpert's radar as well. California was tightening its air-quality and water-use regulations. Customers were demanding higher-quality materials and more responsive service. New computer technology offered the possibility of automating much of the quarry work and concrete production. But the investments required would be costly and time-consuming.
Bruce Woolpert is a mild-mannered man, almost scholarly in his demeanor. Even so, you get the sense that he regarded these challenges the way Tom Cruise's character in Top Gun regarded enemy aircraft: as opportunities, not problems. Surely the company could learn to compete in this new marketplace. Why shouldn't Granite Rock be as sophisticated and people-oriented as Hewlett-Packard, as customer-centered as Nordstrom? Woolpert began with a little learning of his own. He spent time in the quarry, at the cement plants, in the mixer trucks, asking people -- he shuns the word employees -- what they liked and didn't like about their jobs. He had them list companies they themselves patronized because of their excellent service. He invited Tom Peters in for a daylong presentation, making sure a cross section of employees attended. He promoted some new executives from within and brought in a couple from the outside, such as his business-school roommate, Wes Clark, by then a 10-year veteran of Cummins Engine.
