NATIONAL HARBOR, Md.—Collaborative effort on the part of all Goodyear associates—with its dealers as an integral part—has made the tire maker a boom company again.
Goodyear President and CEO Rich Kramer said that during his Jan. 29 keynote speech at the 2013 Goodyear Dealer Conference, telling dealers: “We need to get ready and prepare for growth, because it's coming.”
The meeting took place in National Harbor, across the Potomac River from Washington, D.C.
A clear, consistent strategic plan has led Goodyear to industry leadership in both sales and technological innovation, Mr. Kramer said. He singled out Steve McClellan, president of Good-year's North American Tire Business unit, for particular praise in implementing and leading company strategy.
But the Akron-based tire maker didn't always have a strong business strategy, according to Mr. Kramer, and that caused trouble for the company.
“Ten years ago, you would have seen a company that made tires there wasn't even a demand for,” he said. “About one-third of the tires we made didn't even bear our name.
“We had a business model that wasn't working,” he said. “That seems obvious today, but it wasn't back then.”
Goodyear started its strategic turn-around by “cranking up the innovation machine,” as Mr. Kramer put it. That innovation set the pace for how new tires entered the market, so that Goodyear now enjoys substantial sales growth even in a time when tire shipments are at a historic low, he claimed.
There are four specific elements to Goodyear's strategy, he said, and “they are applicable to an organization of any size, and for any organization going through change.”
The first element, according to Mr. Kramer, is clarity of purpose. Without it, he said, you can't expect your employees to understand what they're striving for.
He told a story about the late Steve Jobs, who once walked into an Apple Inc. employee meeting and drew a quadrant with four separate boxes.
“Jobs said, 'If you're not working in one of these boxes, you need to stop and think about what you're doing, because you're not aligned with what we're doing,'” Mr. Kramer said. “I have never found a more elegant way of putting it. You may have hardworking people, but they need to be working in one of the boxes.”
The second element, Mr. Kramer said, is the courage to make tough decisions that may go against received wisdom, but which make sense for the company.
“That's why we ran plants at less than capacity,” he said. “That's why we walked away from business where we weren't making any money, or that wasn't aligned with what we were trying to do.”
The third element is collaboration, in which everyone in the company works toward one clear goal instead of several obscure ones, he said.
Goodyear's previous problem in this area manifested itself in its forecast structure, Mr. Kramer said. When he started with the company in 2000, it issued four different forecasts every month, each routed through a maze of corporate departments for approval.
This resulted in such jumbled projections of future demand that the company couldn't even estimate how many tires its customers needed, or in what market segments. This made it an unreliable supplier, he said.
When Goodyear changed its policy and aligned itself to one forecast number, that increased efficiency to the point that the company now has the lowest inventory levels in its history, Mr. Kramer said. “If I told my team three years ago that we could accomplish this, they wouldn't have believed me.”
The fourth element is accountability, which involves both aligning the company's markets and building its capabilities.
“You can't have one or the other,” he told dealers. “Without building capabilities, aligning markets won't be sustainable.”
Throughout the process of developing its strategic plan, the advice and collaboration of Goodyear dealers were indispensable, according to Mr. Kramer.
“There's no such thing as a bashful tire dealer,” he said. “You told us what you thought, and we listened. Your advice shaped our policy going forward.”
In preparing for the future, everyone involved with Goodyear should count on inevitable upward changes in the tire market, according to Mr. Kramer.
“In 2007, the tire industry saw 258 million units shipped,” he noted. “No one then thought the industry would move backwards. Today, the biggest mistake we could make is to assume the tire market is staying at very, very low levels.
“I challenge you to prepare for growth, because the customers are going to be out there,” he said. “We want those customers not only to prefer Goodyear, but to demand Goodyear.”
To reach this reporter: [email protected]; 202-662-7211.