Alan Thompson: Director Of Operations Of Texaco Canada

Alan Thompson proclaims himself as a sheep herder of sorts. Through our interview with the man himself, our group has found an individual that embodies the leadership qualities that this course has taught us. Alan’s time as Director of Operations of Texaco Canada, a major lubricants manufacturer that services both the Heavy Equipment and Truck and Coach industry, as well as the Automotive industry as whole, enabled him to put the qualities we feel represent a strong leader, to work as he restructured the company and increased their profitability by a measurable margin. Alan’s vision of the right product for the right customer was exemplified in their ‘reset’ strategy. In other words, by focusing on the right customers, and deleting redundant

systems, Alan was able to contribute to Texaco’s success in Canada. Texaco’s education of its’ employees, that is, to educate Texaco’s people to sell specialized products specific to individual customers, emphasized the need to have the right people internally doing the right jobs within Texaco Canada. By empowering employees and becoming a Sheep Herder of sorts himself, Alan Thompson was able to empower his employees and provide execution to the goals that his strategy had outlined. By using the Sheep Herder Technique, that is, by empowering his internal employee’s to make the right, and wrong decisions, Alan’s resources as an overseer were best used in helping the laggards, or stragglers in his herd. He found that by helping the least successful, and empowering the leaders in the herd, that Texaco could once again become a big player in their industry. The culmination of this process was improved lives. In other words, delivering better service to industry customers by increasing service intervals, decreasing time vehicles spent in the shop, and thus increasing profitability for not only the customer, but for Texaco itself. Alan Thompson’s time as Director of Operations of Texaco Canada from 1999 to 2005 exemplified his role as a leader. Alan Thompson exemplified what it means to be a leader, as compared to the several aspects of leadership we have learned in this course.

Alan’s first and only position at Texaco Canada was as Director of Operations.

Alan needed to figure out how to increase profitability, the goal he was hired to achieve, by restructuring and educating his employees in any way he saw fit. To exemplify the grandeur of his position, Alan Thompson reported regularly to the President of Texaco Canada. Having a background with Redpath Sugar, a major sugar manufacturer, Alan’s vision became clear soon after starting at Texaco Canada: Deliver the right product, for the right price, all the while understanding exactly what it was the customer desired out of their business transaction. Alan’s examination of the business concluded that Texaco had multiple product lines, some redundant, and the missing link was that customer’s needs were not being matched to the right product in Texaco’s line up. He exclaimed in our interview that in his industry, the 80/20 rule was prevalent. In other words, Alan found 80% of customers concerns when dealing with Texaco were driven by price of product, while only 20% of customers concerns were driven by purchasing the right product that would allow a lower compound cost when down time and cost of service were included. Alan’s strategy had to be, from an operational standpoint, to figure out ways to convince the 80% of customers that they needed to transfer their vision of cost to a more long term model. That is, in order to lower costs over the long term of operating a business, that a higher quality product being used in their vehicles, over time, would increase productivity of their vehicles, decrease the downtime associated with servicing vehicles, and increase profitiablity. By taking this customer first approach, Alan found that Texaco Canada could increase its’ sales of a broader scope of available products, and not just increase sales of their cheapest, lowest quality oils and

lubricants.

In Alan’s eyes, education internally, and then externally to customers was the missing key to success that Texaco Canada needed. But how was he going to enact this as Director of Operations?

People were the key. Texaco of Canada had the vast employee base necessary to sell product, but it was lacking internal education. Texaco Canada being a subsidiary of Texaco, a USA based public company, Alan found that he needed to cater his employees to the Canadian market place. From talking to his employees, Alan found that most customers had a ‘make it cheap’ attitude, where their total cost on invoices from Texaco Canada influenced whether they brought their products from Texaco or not. In other words, if the invoice had a lower number, that covered lubrication needs for their entire fleet, they signed on the dotted line. Alan had to restructure his employee sales base so that each salesperson knew that by using Texaco’s higher end oils and lubricants for most applications, that longer service intervals could be used, less damage and wear could be done to affected parts, and in total the company using these higher end products would save money through decreased downtime and more efficient vehicles in their fleets. In our interview, Alan really emphasized the key to this vision and strategy was educating his team, his people, to understand and get excited that Texaco’s specialized product line could increase long term profitability for their customers, even though their invoices were at a higher price to the customer. That higher price paid to Texaco mean’t exponentially higher profits to a customers business over the long term. To exemplify this, Texaco Canada’s employees found that by calculating lost revenue associated with the down time it took to change oil and other lubricants at lower intervals, which was needed when using cheaper, lower quality lubricants from Texaco, an average fleet vehicle revenue cost to a customer’s business was around $3000 CAD. This was due to more frequent service intervals, as well as less overall life from moving parts that needed these lubricants. By paying a slightly higher initital cost for a better quality lubricant, the service intervals became extended, which decreased not only wear on parts for the customer, but mitigated that $3000 CAD cost associated with servicing a vehicle in the first place. Once Alan’s people became thoroughly educated and empowered by this information, they could diffuse this information to the customer. It was through Alan Thompson’s education and utilization of his people that Texaco of Canada turned the 80/20 rule upside down.

Once Texaco of Canada’s people had clear outlines of why it made sense to use other lubricants than what was simply available at the cheapest price, it became easy to execute Texaco of Canada’s vision and strategy. By going after customers and educating them that it simply was not possible to have cheaply priced products with the best results, employees were able to convince customers to look at different options, and to thoroughly educate them of each level of product’s effects on their fleet, and more importantly, their bottom line profitability.

In terms of oversight, Alan used a strategy he liked to call ‘Sheep Herding’ to empower his employees and ensure that his bench was always filled with new leaders ready to move vertically within Texaco of Canada. Alan proclaimed himself as a sheep herder, and used his experience growing up on farms to convey his strategy in execution to us in our interview. He suggested that when herding sheep, a herder does not have to focus so much on the sheep’s leading the herd. They tend to take of themselves. Where a good sheep herders focus needed to be was at the back of the herd, ensuring the laggards and stragglers of the herd were keeping up with the pack. In this strategy, Alan explained that the key was to empower people he saw leadership, and promotional qualities in. He used the term ‘buying in’ when explaining how he would pose questions to his team, and then accept and follow through with answers and solutions to problems that leaders in his team put forward. He suggested that long term success was the key motivator, and that failure within his team was tolerated as a contributor to learning and the teams long term success. He found ways to reflect on his team’s failures, to ensure they did not happen again, and the team moved forward. By buying in and empowering his team, with little intervention from Alan himself, his resources could be spent focused on the laggards, or underachievers within his herd. He told us that most of the time all he had to do was talk with these low achieving employees, and develop individualized strategies for their success. He found that most laggards in his company were confused about the roles that they played, or about what their level of seniority was when it came to decision making. Perhaps they felt that their opinions were not valid because of the job title they held, and thus they contributed to the team effort less than average. By ensuring these types of individuals did have the right to make certain decisions, and by clearly defining their roles within Texaco of Canada, Alan was able to enable his people to execute to their full potential. Although this did not always work, Alan, as a leader himself, had to occasionally show some laggard employees the door and convey to them that perhaps Texaco of Canada was not the right company for them. However, he always attempted to solve problems with under achieving employees first, as losing the investment Texaco of Canada had in each employee mean’t a loss for the company as a whole. He found that this sheep herding strategy worked wonders for Texaco of Canada, and that this was a key strategy in increasing profitibality within the company. His team felt empowered, they felt like they could own their position and flourish in this new environment, and it paid dividends.