The Education of an Educated CEO

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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.

The old method was to estimate the coming year's sales -- essentially tweaking last year's results -- and schedule the plant in long, uninterrupted runs to produce the necessary inventory: cashews, mixed nuts, candies. Even if orders came in that didn't match expectations. It was convenient for production workers but ultimately costly to the company.

Koeze got the production, sales, and shipping people together and told them to fix the problem. "A huge improvement came by just saying this really matters," he says. In 1998, unsold merchandise was $200,000. "A number I can live with," he says. Also a glimmer of hope that his workers, if asked to, could actually help solve a problem. Radical change, including twice-daily meetings to adjust production to sales results as the holiday season heats up, has now brought unsold merchandise down to less than $150,000, even as sales have almost doubled.

IF YOU'RE NOT CAREFUL, YOUR BUSINESS'S HISTORY WILL BE YOUR DESTINY

Scott Koeze had been forced at age 28 to take over the business when his father died suddenly, and he had had a love-hate relationship with Koeze Co. ever since. He had always made sure Jeff felt absolute freedom in choosing a career. Though the two were vastly different in temperament, they sought each other's company. When he was a kid, Jeff recalls, his father left for work at 5:45 most mornings. "But if I could hold him up until 6, Looney Tunes would come on, and he would watch with me for an hour."

As a youth, Jeff sometimes went to the plant with his father, shoveling peanut skins away from the roaster and into burlap bags, and wedging his slender body into tight spots to inspect for rodent droppings. But Jeff never saw himself running Koeze Co.

And it was peculiarly his father's company. Scott Koeze had made some smart moves. He had sold his biggest product line, private-label peanut butter (a $10 million operation), when he realized the business was about to get squeezed by supermarket consolidation. He had built a business selling Koeze's nuts and candies through community groups doing fundraising. And he had built up the catalog business to spread sales nationally.

But he had a touch of the crazy boss in him. Weeks after being hired as Scott Koeze's assistant 26 years ago, Deborah Owsinski introduced her new boss to her husband. " 'I'm so happy to meet you. I love your wife,' " she recalls Scott saying. "And he turned and planted a big wet kiss on my mouth. That sort of set the tone. He was hilarious. I loved working for Scott. He was not predictable."

Not everyone was laughing. Tom Lakos, who runs Koeze's two retail outlets, both in Grand Rapids, recalls Scott Koeze sneaking up on him "just to catch me not working." More than once, the boss yelled at Lakos so thoroughly, over a variety of matters, that a co-worker dissolved into tears.

Inconsistency led to dysfunction. Scott Koeze was known for asking employees to look into his latest whim. Then he would forget about it and express surprise or lack of interest when workers reported back to him with proposals. So people began ignoring his requests.

Jeff Koeze, unaware of this little drama, was perplexed when, as the new boss, "I'd ask people to do stuff -- and they wouldn't do it." He only later found out why. "As it turns out, it was entirely logical behavior," he says.

Indeed, it took Jeff some time to realize he was having a personality clash -- not with any individual but with the established rituals at Koeze Co. It's a problem that blindsides many who enter a new business at the top. Hyperrational, by his own description, and accustomed to university colleagues who were also wired that way, Jeff expected workers at Koeze Co. to behave similarly.

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