CEOs who Outlast and Outperform in Canada
As the co-leader of Deloitte’s Best Managed Companies Awards Program, Lorrie King shares the 4 key areas where Best Managed companies exhibit outstanding performance over the average Canadian company.
Lorrie King is the Greater Toronto Area Marketplace Leader for Deloitte Private at Deloitte Canada. She is also the co-leader of the Best Managed Companies Awards Program, the leading program recognizing the accomplishments of private companies in Canada. With over 27 years of experience in industry and privately-owned businesses in Canada and abroad such as Deloitte Canada, MyTravel Group and Arthur Andersen, Lorrie brings a wealth of knowledge and experience as a trusted advisor to her clients. Lorrie started her career with Arthur Andersen in 1986 in Toronto and was part of the team that launched the original Canada’s Best Managed Companies program in 1993.
Nancy MacKay: Welcome to the CEO EDGE podcast show. I'm Nancy MacKay, and I'm the founder and CEO of MacKay CEO Forums. Our vision is to populate the world with better leaders. On this show I interview CEOs, thought leaders, and advisors to CEOs, to help you, our listeners, become better leaders.
Nancy MacKay: I'm here today with Lorrie King. Best Managed co-lead and partner, Deloitte Private, at Deloitte Canada, and our topic for the CEO EDGE podcast show is, CEOs who outlast and outperform in Canada.
Nancy MacKay: Thank you so much Lorrie for being our invited speaker here today.
Lorrie King: Oh thank you, and thank you for having me Nancy.
Nancy MacKay: Now, Lorrie is the Greater Toronto Area marketplace leader for Deloitte Private at Deloitte Canada. She is also the co-leader for the Best Managed Companies Awards
Program, which is the leading program recognizing the accomplishments of private companies in Canada.
Nancy MacKay: She has over 27 years of experience in the industry and privately owned businesses in Canada and abroad, such as Deloitte Canada, My Travel Groups, and Arthur Andersen. And Lorrie brings an incredible wealth of knowledge and experience as a trusted advisor to her clients. Lorrie started her career with Arthur Andersen in 1986 in Toronto, and was part of the team that actually launched the original Canada's 50 Best Managed Companies program in 1993.
Nancy MacKay: Lorrie, it really is an honor and a privilege to have you here on the CEO EDGE podcast show. I've seen you in action with not only overseeing the judging panel for Best Managed, but with our members and on our panels and what have you, and so would love for us to start this podcast with you sharing with our listeners, what is a Best Managed Company? And this report that I think is a must read for all CEO's, some of the insights based on the research? So maybe let's just start with, what's a Best Managed Company?
Lorrie King: Thanks Nancy. So the Best Managed Companies program as you mentioned is 25 years old, and it's a program that recognizes success in Canadian private companies. Every year Deloitte awards approximately 50 companies with this designation. And in order to apply, a company must be majority Canadian privately owned with revenues of at least 15 million dollars annually. Most of the companies have demonstrated sustained success, and they have excelled in four key areas.
Lorrie King: The first is, they have a well thought out strategy, they have great capabilities, they demonstrate commitment to deliver on this strategy, and they have strong financial performance.
Lorrie King: Most of them are globally focused, and they're very clear on their purpose and vision. They're always identifying opportunities to differentiate themselves. And that has tended to be what we've seen in private companies as we've done this program over the last 25 years.
Nancy MacKay: Well, and you have so many companies applying each year to get this Best Managed Company recognition, because people want to be the best that they can be. People want to do business with Best Managed Companies, and they want to work for Best Managed Companies, and I know you and I are both raving fans of that Best Managed community.
Nancy MacKay: Let's maybe just share with our listeners, because I know that you have this report, which talks about the companies that outlast and outperform in Canada and the key areas that they focus on. What differentiates them from all other companies that don't have that designation?
Nancy MacKay: And maybe let's talk about each one of those areas and have some tips for our listeners.
Lorrie King: Sure. Something, being involved in the program for as long as I have, we always had a sense that these companies were different. That's been our gut instinct for a long time. But what we wanted to do was, we wanted to actually set out to prove that these companies are different. And not only to prove that they are different, but then to also understand why.
Lorrie King: At Deloitte we have a group called The Future of Canada, and we look at different elements about the Canadian economy. And so this year, we decided to focus on the Best Managed Companies. And what we found when we actually did the research, was that our gut instinct was absolutely right. These companies are different.
Lorrie King: Just to kind of share some stats around how different they are, is that based on our cohort of 25 years’ worth of companies, these guys, this group are 2.1 times more likely to still be in business than the average Canadian company. They're 34% more likely to have gone public, and they're 30%, or 30 times, sorry, 30 times more likely to be acquired.
Lorrie King: And so, there's definitely a difference between this group of companies and the average company.
Lorrie King: Now, when we actually did the research, we wanted to understand, so what is it that makes them different, and we really came up, there was four key areas that came out through our surveys and our interviews that we did. They have a deeply ingrained focus on the future; they have a relentless focus on people; they have an intentional approach to innovation; and they have a strong global orientation. So those would be the four key areas where we found a significant difference that caused that great performance that we saw earlier.
Nancy MacKay: Also it sounds like pretty strong evidence that they outperform and outlast other Canadian business. And so let's maybe talk about the “secret sauce”. What are each of these four key areas, so that our listeners can perhaps get some tips. When we take the first one you talked about a future focus. What does that mean and is there an example of a company that stands out in your mind that really is future-focused?
Lorrie King: For sure. So what we found was that, first of all, they bring a long term lens to their decisions. They think about what the future is going to hold, and they make multi-year investments. They're not just looking to manage earnings in the short term.
Lorrie King: Two-thirds of them are actually developing comprehensive business plans for a range of future challenges versus only 19% of other businesses. Many of them expect to be disrupted, and they're actually making plans as to what is going to happen to their business should various disruptors happen.
Lorrie King: The one that stood out in all of our minds was, there's a company called Oppenheimer out in the West Coast. They're a fresh produce supplier, and they have an amazing yet powerful annual planning process. What they do, is every year they seek input from their top customers and their suppliers to find out how they're doing and where they think the industry is going next and where their customers and suppliers think they should be focusing.
Lorrie King: They also have a global group called Champions of Change, which is an employee group that provides strategic insight into what their employees are seeing on the ground, and they use that to help inform their strategy. So they take all this input from their customers, their suppliers, their employees, and they narrow it down to two or three priorities that they're going to focus on for the coming year, and that's how they put together their planning process.
Lorrie King: So we're seeing this external validation of what's going on in the world, so they're not just looking at their own internal processes, and then they take all that to put together a very focused group of priorities for their future.
Nancy MacKay: I think if I, correct me if I'm wrong, because John Anderson who's the CEO of Oppy is a most admired CEO, and he leads this Best Managed Company, and he's been with the company for decades, and it's a billion dollar plus company. They're platinum, are they?
Lorrie King: They are.
Nancy MacKay: Platinum many years. Yeah. And so this idea of rigorous business planning and what have you, is what got them to a billion dollar plus company, and they've been in the program for many, many years, and I know that a lot of the, even the Best Managed Companies look up to Oppy and what they've been able to do.
Nancy MacKay: Let's talk a little bit about the change that's going on. We live in this exponential change world. We're talking about business planning. When we think of future focused, what's the planning horizon that you see most Best Managed Companies when they're planning for the future, are they planning out for five years ahead? Ten years ahead? Or are they looking one year, two year ahead in this crazy world we live in?
Lorrie King: I think what they're doing is they're looking out five years but what they're really doing is they're prioritizing on the next one or two years. What we're seeing is that the world is changing so quickly Nancy that the old days of doing the five or ten year strap plan and putting it on the shelf has really, that's really fallen by the wayside. And so companies are finding they have to be much more nimble.
Lorrie King: But the other part of the planning process that we see in Best Managed Companies is, they don't just set their plan and then blindly go down the path of following it. They actually look at a series of different possible outcomes and disruptors and plan for how they're going to react to that. So, how would you react if the dollar goes through the roof? Or alternatively, if it falls? And so what they do now is they actually plan for a series of different types of future outcomes and then look at how they would react to different ones. So that it's not just a one kind of road plan that they blindly go down. They actually are planning for different futures. And that usually, you know, the one or two year, I don't want to use, one or two year horizon.
Nancy MacKay: Yeah, so it's like scenario planning, and they're planning for either disrupting or what are the scenarios of disruption so that they're ahead of it.
Lorrie King: Absolutely.
Nancy MacKay: Okay, so let's talk about people. Relentless focus on people. What does that really mean, and what's another example of a company that walks the talk on that one?
Lorrie King: So people is at the core of business for almost every Best Managed Company. One of the things that we saw in the survey was that they see that their people are the single most important factor, more than two thirds of Best Managed Companies have made large investments in their talent acquisition and retention over the past five years, and 80% of them plan to invest heavily in talent over the next two years.
Lorrie King: So we know that it's a significant area. The one company that stood out again to us was Fountain Tire. So Fountain Tire is a tire dealer, and what they've done is they've built into their 50/50 business model the core of people. They own 50% of their stores, and their owner employees own 50% of their stores, so that everybody has a stake in the business, because they're also employees and they're also owners. And because of that, they also have a local flavor. And so what we're seeing in Fountain Tire for example is that they're investing and collaborating with local educational institutions, which they're able to do because they have owner employees on the ground in those local communities.
Nancy MacKay: Great to have so many Western Canadian based Best Managed Company examples. They've had incredible success. I know when the CEO was at our last Best Managed big event that you were co-chairing, it was great to hear the success that they've had with their huge talent pool.
Nancy MacKay: So when you talk about 80% are going to significantly invest in the next two years, what types of investments, is that in leadership development? Is it in recruiting or what? What do you mean by investing in people?
Lorrie King: I think it's really in all of the above. So what we're seeing on the people front is that employees nowadays want to be involved in what we call purpose-driven organizations. When we invest in people, we invest in the community so that our employees, the Best Managed Companies’ employees feel like they're part of the company and they feel that their company also supports the community in which they live.
Lorrie King: So we see a high degree of investment in philanthropic activities and in community involvement for the employees and for the company. We also see a huge investment in leadership development. A number of our Best Managed Companies actually have their own university or their own school where they can control and manage and invest in the development of their people. And so I think those are two of the key areas we see.
Lorrie King: The other area we see is just the investment of time. Another one of our Best Managed Companies, Napoleon, the CEO ensures that every year he meets at some point with every employee, and so they spend time with their people to understand what's going on, listen to their concerns, hear about their accomplishments, celebrate their successes with them, and truly get to know the employees, and that way the employees feel a huge commitment back to the company because they see the commitment that leadership has in them.
Lorrie King: So the other thing we've noticed around the peoples part of this is that it really does start at the top. So we're seeing huge commitment on the leaders to spend time with the people and to invest in their people.
Nancy MacKay: Great examples of how companies are really dialing that up, and in particular, we'll segue into the next category, which is they innovate, and they really embrace innovation, which is our theme for the entire year at MacKay CEO Forums. We can't lose sight of the fact that if you're not focused on people, and making sure your people strategies are aligned, then innovation doesn't happen.
Nancy MacKay: Let's talk a little bit about what's the difference with these Best Managed Companies? How do they innovate, and what's different about them?
Lorrie King: So innovation, as you may know, and you've probably heard me say this, I think innovation runs the risk of being an incredibly overused word these days. And I think it's important to just differentiate innovation from disruption. And so we talk about disruptors, but I think what many of our Best Managed Companies see is that they need to continue to innovate, but they need to do it in a very purposeful way, and they need to do it in a manner that they have a framework around their innovation, so that they make calculated investments in innovation as opposed to disruption for disruption's sake.
Lorrie King: One of the companies that we see in this area that's outstanding is Artopex. So, Artopex is an office furniture manufacturer. That's a very traditional industry, but what they've committed to is having a new product on the market every six months. But the products are coming at them from their customer base, it's coming from their employees, and they're doing it be looking at the workplace experience, and then trying to figure out what additional products are going to make the workplace experience more relevant.
Lorrie King: So it's not just new product for new product's sake, it's doing it in a very thoughtful way, it's doing it through your employees and again through your customers, much as we saw in the strategy way, is that it's involving and sensing in the community, and then innovating in a way that makes sense for your business and again through a calculated investment as opposed to simply having broad sweeping disruption.
Nancy MacKay: Well, we see so many of the Best Managed Companies, they've, relative to other companies, they really do cut checks, hire people to help them, create a culture of innovation so that they actually are leaders in their industries, and they're the ones that are disrupting, not waiting to be disrupted kind of thing, right?
Lorrie King: That's right.
Nancy MacKay: So that's one of the best parts of the Best Managed community, is they're just wired to lead. That doesn't happen unless you have this culture of innovation and invest in it.
Nancy MacKay: And so let's talk about the fourth one here, which is, you talked about going global, or at least having a global mindset or visions. Talk a little bit about that.
Lorrie King: So going global, the world is just getting smaller as we all know. And we know that our Best Managed Companies are 37% more likely than their competitors to embed themselves in global value change.
Lorrie King: So they look abroad for their suppliers. They look abroad for sales. They look abroad for strategic investments. And equally important, they look abroad for talent. So they look at the world as their talent pool. And they really are looking at the entire business and looking at where they can find opportunities for talent, for sales, and for supply chain globally. And so if we look at a company like Hatch, Hatch consultancy, is a global engineering firm, and they started going global by following their client. One of the things that they said to us when we did the interview was that as their clients went global, they realized that their quintessentially Canadian challenges that they solve and the skillsets that they had developed were just as applicable to global problems as they were to Canadian ones.
Lorrie King: And so they took what they had learned here and they applied them to global problems. And as they expanded geographically, the other leading practice that they've realized is that sustaining their corporate culture as they went global was really important to success. So what they do is they find and develop like-minded leaders in each jurisdiction in which they operate so that they truly can operate as a global entity with one culture and one group of employees that are all pulling together.
Lorrie King: And you see that in their projects, because their projects will have people from various countries all working on the same project.
Nancy MacKay: Well, and that's just a huge Canadian success story and a great reminder that growth doesn't have to be just here in Canada, and it doesn't have to be when you run out of market share. You can follow clients. Which, such a great example of that.
Nancy MacKay: So we've gone through the four key areas that differentiate. Any other tips or advice that you have for our listeners who may or may not be part of the Best Managed community currently today, in terms of how they can get more information. You have so many great reports.
Nancy MacKay: There's this Outlast and outperform report here that's about 40 pages, but it's full of practical case studies and insights. There's the Courage report, because being a leader requires a lot of courage. There's just so much wisdom that I know that you have access to that we want to be able to release to all of our listeners.
Nancy MacKay: What advice do you have to our listeners here?
Lorrie King: So the best advice that I can offer up, and I think it's great is that we do have a website: www.Canada175.ca, and all of our Future of Canada reports can be found there, including one on diversity that we launched a couple months ago as well. The other thing that companies can do, which I think is sort of a cool thing, if I can say that, is that as part of the Outlast and outperform, there is a self-assessment tool that companies are more than welcome to fill out, and so you can go in there and you can actually benchmark yourself and your own company against the Best Managed Companies that we have highlighted in this report. And so we certainly encourage companies to do that. And that is within that Canada175.ca website.
Nancy MacKay: And we're, just so that we just share with our listeners, we're in the next phase of Best Managed for this coming year, and so maybe just share a little bit of information in terms of if any of our listeners would like to get involved with the Best Managed Companies program, and how they might contact you specifically if they want to learn more?
Lorrie King: Absolutely, we actually, the timing is perfect because we're just about to launch our 26th annual program. It's going to open on July, sorry, on June 11th. The website will be available to take applications. The website for that is www.BestManagedCompanies.ca, but if anybody has any questions, they can reach us at BestManagedCompanies@Deloitte.ca, and that's a mailbox that's monitored 24/7, and I would certainly be happy to respond to any questions that come in on that around our Future of Canada series, around the Best Managed Companies program, because we just, as you know, we just think it's a great program, and we know that many of your members are also Best Managed Companies, and so we really have a great community together around this program and around your organization.
Nancy MacKay: Well thank you so much Lorrie, I know that we're running out of time here on the CEO EDGE podcast show. So for our listeners who would like to listen to this podcast again or access any of our podcast episodes, you can join us at MacKayCEOForums.com. Thanks again Lorrie for joining us here today.
Lorrie King: Thanks Nancy.
Nancy MacKay: Thank you for joining us on the CEO EDGE podcast show. Please visit MacKayCEOForums.com if you are really committed to becoming a better leader.
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