These are trying times for retailers, but the good news is that tough times produce innovative leaders and great new ideas. At TruServ, a member-owned hardware cooperative supporting more than 7,300 independent retailers operating principally under the True Value name, times got tougher earlier this year when the company defaulted on one of its debt covenants. Coincidentally, in March, Pamela Forbes Lieberman, a veteran CFO in the manufacturing and distribution industries, came aboard as Chief Financial Officer. Lieberman assumed the additional responsibilities of Chief Operating Officer in July, when CEO Donald Hoye resigned. In mid-November, with the company consistently exceeding its business plan under her leadership, she was promoted to the position of CEO. TruServ Chairman Bill Blag noted, "Pamela has consistently demonstrated a drive, determination and discipline that has resulted in the successful execution of TruServ's restructuring plan." Before coming to TruServ, Lieberman was CFO of Shoptalk, Inc., a voice application software company. She had moved there from Martin-Brower Company, a distributor in the McDonald's system. From 1993 to 1998, Forbes Lieberman was vice president and CFO for Fel-Pro Incorporated, where she led the sale of the business to Federal Mogul. She also spent four years as vice president of finance acquiring and integrating individual companies of Bunzl Building Supply, a distributor of commodity and branded building products. From 1975 to 1988, she held a variety of positions at Price Waterhouse. She holds an MBA from the Kellogg School of Business. She now commands the business that includes True Value Hardware, Grand Rental Station, Taylor Rental, Party Central, Home and Garden Showplace and Induserve Supply. The Chicago based company with $4 billion in annual sales carries 60,000 SKUs in its warehouses and another 450,000 in direct-from-manufacturer programs. TruServ is a retail hardware company, a commercial/ industrial supplier, a rental chain and much more. The company has over 4,200 employees worldwide. Lieberman, the daughter of an accomplished opera singer and the sister of an opera company founder, serves on the boards of two opera companies and follows the art with the same kind of passion and knowledge that mark her leadership as a CEO. She has always done the handywork around her house and continues to do projects in her off hours. Forbes Lieberman spoke over breakfast with RIS News Editorial Director Dennis Eskow.
RIS: TruServ has faced a difficult year, but it appears things are on the mend?
Lieberman: We're doing well in this area. We have been meeting and exceeding each of the goals set out in the business plan we put together in early July. I think this has helped. It has improved the morale of associates here because success breeds success.
RIS: What do you want people to say on your first anniversary as president of TruServ?
Lieberman: I'd like them to say that I worked with the associates and the members to help create the vision of TruServ as continuing to be the preeminent hardware co-op. At the same time, I want them to say that all of our associates share in the passion that our members have and that I have developed for this business; that we have successfully transformed our culture to one of performance and accountability as well as increased profitability.
RIS: Are you creating instruments to measure these things?
Lieberman: Not only instruments, but also marketing programs have been crafted to help drive footsteps into our members' stores. Two big issues for us are growth and member retention. So we have to be more than a simple buying program for co-op members. We supply marketing tools that help drive growth.
RIS: Give us an example of the marketing tools.
Lieberman: We have a number of signature programs. One is our Grill Zone program where we help create a fun shopping experience for purchasers of anything from a Weber Kettle Grill to high-end gas grills for the back yard. We also have an in-store Platinum Paint program, we have True Value Gardens and we have an in-store rental program, Just Ask Rental, to name a few.
RIS: What do you give co-op members to help them with operational excellence?
Lieberman: We have a program called AIM -- advanced inventory management -- that helps them determine a proper assortment and to identify the appropriate inventory turns for their stores. This is crucial to their profitability.
RIS: Where does technology fit in the picture?
Lieberman: I have always been an advocate of technology as a strategic tool. When I was CFO at Fel-Pro I was executive sponsor of an Oracle ERP system project and a data warehouse project. At Fel-Pro I had team members who could implement so I had very little hands on involvement in technology. In "startupland," there wasn't that kind of support staff and I then had to be more hands on. I became more of a power user. We have a competitive advantage with our technology and technology is a major part of our future.
RIS: You have developed so much technology in house that is the envy of the industry. Internet-based catalog. Will you sell any of your technology to other retailers?
Lieberman: We are focused on the basic initiatives I have already discussed. There have been parties outside our own industry that have expressed interest in our Internet Custom Catalog. But for us technology is a competitive advantage and not a product. (CIO) Neil (Hastie) and I make build or buy decisions when technology issues arise. Technology is so very strategic to our future success. For example, we can use technology to shrink the inventory dollars in the supply chain. We'll continue building on (JDA) E3 and our Internet technologies.
RIS: Most companies your size suffer from disconnects among different functions -- merchandising, IT, finance. How are you shaping TruServ in this regard?
Lieberman: We are getting rid of functional silos. We have one major initiative underway that combines our supply chain activities with merchandising and all the associated support functions -- the technology, finance, accounts payable. It's customer focused. It gets people out of their accustomed silos.
RIS: But how do you keep moving the ball downfield day to day?
Lieberman: Our senior team gets together once a week. We go over where we are on sales, fill rates, on-time delivery, issues from our members and the status of our top 10 initiatives. We are working on responsiveness to member needs. We look for the roadblocks and seek out how team members can help one another. I see us as having jet planes lined up on the runway, and as soon as several of our initiatives are completed, we can start implementing new ones.
RIS: We haven't seen many True Values in malls.
Lieberman: Not within an enclosed mall. But when we are near a big box, the entrepreneur looks for those points of differentiation. Maybe a big box store has only chrome bathroom fixtures. Our entrepreneurs would look at the market and see if he or she could benefit from carrying brass fixtures. Add to that the service and convenience of the True Value store and the customer now has a choice.
RIS: So executives moved out of their functional silos into new accountability and a kind of new drive forward? Didn't some of the old line balk when you started doing this?
Lieberman: There's nothing like a good old-fashioned crisis to get everyone on the same page. Once we defaulted on one of our debt covenants it was essential for everybody to pull together. When things are going very well, it has been my experience that when you want to drive organizational change you'll always have someone asking why we have to do it. But this year, there was no alternative but for everyone to pull together. And it has worked.
RIS: Where do you expect TruServ to be in two years?
Lieberman: We'll be profitable. We will have a stable membership. We will experience growth from the initiatives we are starting today and we'll continue to be the preeminent hardware co-op. Once our financial condition is known as stable, we're going to be able to attract members from other co-ops who like the customized marketing programs, who like our model, but perhaps have put off a decision until we are stabilized.
RIS: In your life, who have been your best teachers?
Lieberman: My parents instilled wonderful values in us. And at Kellogg, I would say Gene Lavengood was a great teacher who gave me an appreciation for the impact of geopolitical environments on business issues. I learned so much from my time at Fel-Pro. Employees would "walk through walls" for customers and in turn would be rewarded in the success of the business. Fel-Pro's owners emphasized the balance between work and personal life. We will pursue that at TruServ.