How Total Transparency Saved My Company
It was, without a doubt, his company's "darkest moment," says CEO Rob Tolleson.
Growing at a 30 percent annual clip, CPO Commerce, an online retailer of power and hand tools made by Black & Decker, DeWalt, Makita, and other manufacturers, embarked on a major IT upgrade. The resulting software malfunctions would have crushed a lesser company.
Unprocessed orders began to pile up in the warehouse, generating zero revenue even as vendor invoices poured in. Products that were in stock were listed as out of stock as inventory management went haywire. Adding to the company's woes was the need to train and then retrain staff as new systems came online, stretching everyone's patience, and bandwidth, to the breaking point. CPO, which had never missed a quarterly forecast, missed two in a row.
Not a single employee bailed during that hellish six months, a source of considerable pride to Tolleson. What kept the team together? The company's commitment to total transparency, including an embrace of open-book management. Financials, inventory, order volumes -- there was nothing going on that every employee didn't know about.
Alan Lenertz, CPO's vice president of operations, says that made all the difference. Because everyone had ready access to inventory and order information, employees spotted the problems more quickly than they might have and, accustomed to a collaborative work style, were able to collectively brainstorm on solutions.
More important, transparency kept morale from plunging off a cliff. All employees knew the company had a mess on its hands, but, counterintuitive though it may sound, because they could see exactly what was happening (or not happening), they knew the management team wasn't sugarcoating the situation. "There was more respect and confidence than there might have been otherwise," says Lenertz. "They didn't have to worry that any other, unacknowledged things were also out of control."
Tolleson is quick to point out that this sort of transparency has served the company in the best of times, too -- and most of its times have, in fact, been extremely good. Since 2007, the company has more than doubled in size and now employs 115 people, with sales of $80 million. It expects to grow 20 percent this year.
CPO's open-book management has helped keep everyone on the same page even as the company has expanded geographically. It has more employees at its Lawrenceville, Georgia, fulfillment and customer service facility than it does at its Pasadena, California, headquarters.
Lenertz says that though executives regularly bounce back and forth between the two locations, it's the constant flow of information that really keeps the company united. "All the operational data we receive from Lawrenceville every day makes me a lot more comfortable," Tolleson agrees. And you can be sure that he is not the only one looking at that data -- not by a long shot.
Headquarters: Pasadena, Calif.
2013 Revenue: $80 million