When Jeff Koeze took over his father's company, he knew almost nothing about it or any other business. But he knew how to learn, and 12 years later, he runs one of the smartest companies around.
Twelve years ago, Jeff Koeze surprised his wife, his parents, and himself by agreeing to give up a comfortable life teaching law to take over the then-86-year-old family business. At 36, the professor was going to become a nut man.
His father, Scott Koeze (pronounced KOO-zee), was sick of running Koeze Co., which was doing about $7 million a year, mostly in mail order, primarily in cashews. That worried Jeff enough that he insisted that his father not stick around any longer than two years. If the elder Koeze ended up refusing to leave, Jeff had a golden parachute: two years of salary. Moving from the University of North Carolina at Chapel Hill, Jeff and his wife, Kate, even chose a house in Grand Rapids, Michigan, where Koeze Co. is based, that they figured would be easy to resell. "I wanted a risk-free out if it didn't work," Jeff says.
Instead, a few months after Jeff showed up, his father went on vacation and didn't come back. Didn't return phone calls, either. "I know your dad -- he's retired," a longtime worker told Jeff.
Koeze was in disbelief. "That just can't be," he replied. But it was.
Thus began the education of an educated CEO, a lawyer and tenured professor steeped in book learning but lacking any business experience; given to endless research, at a company that had been built and run by his shoot-from-the-hip father; accustomed to debating with colleagues and letting the best argument prevail, at a company where workers had no expectation of knowing why a decision had been made.
In his early years at the company, Koeze despaired -- not about going bankrupt but over the fear that he would never turn the place into anything resembling his view of himself: intellectually curious, blunt and transparent in speech, and able to shift rapidly from one challenging task to another.
He didn't want to be a smart guy running a dumb business, even if it did make money. And, anyway, he suspected profits wouldn't last long unless the whole place got smarter.
It did. Here's how, one lesson at a time.
IT DOESN'T MATTER HOW YOU LEARN -- JUST LEARN
Before leaving, Koeze's father managed to throw him this piece of advice: "You can't learn to run a business by reading a book."
But the younger Koeze, so unlike his intuitive and impetuous father, had always turned to books for guidance. Besides, the old man wasn't around to show him the ropes. Workers at Koeze weren't going to be much help; they knew only the old ways, and that wasn't at all what Jeff Koeze had in mind. "I attacked it like I attack every problem," he says, "with a stack of books 18 feet high." (For a sampling of Koeze's influences, see "The Well-Read Entrepreneur".)
Among the workers he inherited, he says, he saw "intellectual passivity." People weren't interested in learning new skills. "My employees were extremely good in the narrow base they'd built up over time. But that narrow base gets outdated pretty fast."
Koeze's wide smile often turns down, into a faint grimace. And his eyes widen and his brows lift frequently to suggest a shared secret. But his voice is steady in volume and pace, almost never excited. "I am neither a firer nor a screamer," he told himself. "If I can't get better at this, I am going to have to sell this company."
Koeze, 48, went to remarkable lengths -- hauling in consultants, a shrink, a philosophy professor; reading a library full of organizational behavior books; trotting off to pricey seminars -- to challenge both the workers and himself to adapt to one another and perhaps forge a better way of working together.
Is selling nuts really so complicated? Koeze packages them as business gifts in fancy glass jars, priced to compete with a nice necktie. Send out a million catalogs. Roast and pack. Take orders and ship. But extreme seasonality, with 96.5 percent of sales coming in the fourth quarter, requires rapid expansion and sudden shrinkage. It's jarring. Year-round employment of about 40 swells to some 130 before Christmas. Koeze needed to launch new products and sell through new channels to expand. And doing a good job at even mundane stuff -- buying packaging, running retail outlets, hiring people -- seemed to a business newcomer to invite endless reading and research.
Koeze's eventual success -- he has boosted sales to $12 million, improved profit margins, introduced new products, and modernized manufacturing and order taking, and many workers have ultimately embraced the boss's rigorous data-driven decision making -- isn't an argument for or against business by book learning. Rather, it's an argument for learning, by whatever means an entrepreneur and his or her company can manage it.
Koeze is now a seasoned entrepreneur, with lessons also learned on the shop floor. But still, his first reference in discussing business is almost always a book. Why, I ask him, is his desk organized so meticulously -- 80-some file folders, labeled and displayed in an amphitheater of to-dos?
"David Allen's Getting Things Done," he replies and gives a faithful and succinct synopsis of the book. Having laid out the concept, he then talks about how he applies it to Koeze Co. He operates with a calendar of meetings but no to-do list. A quick scan of his desk, however, can remind him what's hot on his agenda.
EVEN IF YOU'RE GREEN, TRUST YOUR INSTINCTS
Jeff Koeze's first full year in charge, 1997, Koeze Co. ended the holiday season with $600,000 in unsold merchandise. A lot of it was mixed nuts.
Koeze had to heavily discount the stuff. "A one-time, half-million-dollar working capital reduction" was the result, he says.
Should he have been worried? The company was still profitable. Many of his workers didn't seem surprised or troubled. The financial statements -- they made no distinction between finished and unfinished inventory and thus gave no clue about unsold nuts in prior years -- were no help. Still, it didn't seem right to Koeze to have missed the sales plan by such a wide margin. "I was certainly shocked," he says.
