The ABCs of BMC: An HCN CEO Q&A
HCN editors have been listening with interest to Peter Alexander, the chief executive of BMC, since his days as chief executive of another U.S. building supply company. (Check out our October 2007 profile.) Today his company is larger, the stakes are higher, and his influence on the industry in general is greater. And, he’s still interesting.
Our October 2007 profile said Alexander was “equally at ease” in the worlds of finance and lumber. It’s a background that served him well as the executive who guided what was BMC West and SelectBuild out of reorganization and into the growth phase BMC is currently enjoying.
Here is the HCN Q&A conducted shortly after he accepted — on behalf of the 4,600 or so employees of BMC — the 2012 Pro Dealer of the Year award during the October 2012 ProDealer Industry Summit.
HCN: There’s the old BMC and the new BMC. What’s the biggest change?
Alexander: We launched a decidedly different strategy and are running the business to be better — not just bigger. Today, BMC operates as one single company with a local market approach. This differentiates us from our competitors by giving the local guys the resources that a large-scale company has, but the ability to respond to market-specific needs and engage as a local community partner. In terms of buying, systems, metrics and financing, we also knew that operating as one ship would allow us to benefit from our economies of scale. And we decided to have fun as we rebuilt BMC into a better company, which has definitely put the spring back in our step.
HCN: And that accounts for the new BMC branding.
Alexander: Previously, the company operated as a federation of businesses with different labels, different focuses and different metrics. We brought it all under one logo that represented one message — that we are the best. That sounds like a small thing, but that was one of my larger challenges given the legacy businesses and geographic diversity.
HCN: During your ProDealer of the Year acceptance speech (see video at HCN.com), you said going through reorganization was a humbling experience. What was it like going back to the vendors?
Alexander: I think they were justifiably nervous. Vendors were saying: ‘OK, I know they’re protected under the restructuring process, but we don’t want any additional exposure.’ Before I came on board, our executive team did a fabulous job communicating with vendors through the process with integrity and purpose. And all of our supplier partners stuck with us.
HCN: And you became CEO in July 2010, after serving on BMC’s board.
Alexander: When I took over as CEO, we immediately brought together the CEOs of the top 50 vendors to lay out our plan. We told them: ‘Here is what we’re going to do.’ It was almost like a campaign stump speech. We explained where we were and where we were going. And we explained that we would circle back with them, either quarterly or every six months to check in. Since that meeting, our report card has all A’s, and we’ve done everything possible to reward them for their support.
HCN: Do you believe that the role of the CEO is to be the communicator in chief?
Alexander: The CEO should be the maestro of everything that goes on in the company, and ultimately the buck stops with him or her on strategy. It’s communicating the plan to the field, and communicating up to the board, and out to shareholders and lenders. It is a relationship-management job, internally and externally. It is a recruiting job, making sure you have ‘A’ players in place at every single discipline. It’s creating a culture that works. About half of today’s BMC management team has been with the company upwards of 35 years, and the other half I brought in over the last two years. The meld has been seamless. I’m thankful that the senior team has such great chemistry and a can-do attitude. That permeates down to the field.
HCN: The smaller competitor would argue that his advantage is his connection to the community. How would you respond to that?
Alexander: There is enough room for both the large and small guy in the market today. It does not need to be us versus them. As I mentioned earlier, there is a beauty to the functionality of BMC’s model, where our local guys can easily respond to market-specific needs. We also have a strong commitment to knowing and engaging at every level of a community — upstream and downstream. You can see it in every one of our diverse markets. Charitable giving and community involvement are part of BMC’s culture. We’re involved, and we’re giving back to our communities through groups like Light the Night and Homes for Hope and local charities, to donating to the victims of hurricane Sandy who aren’t even in our geographies.
HCN: And the benefits of size and buying power?
Alexander: From an economic standpoint, BMC’s model is a true positive. Being larger differentiates you to the major suppliers and vendors. And BMC is investing a great deal of money and resources in product and field training and personnel to support our supplier partners. Suppliers know that we execute well, have the financial strength and strong working capital available, and the suppliers have been rewarded.
HCN: You’ve described having Jim Collins’ latest book as an inspiration for your company. What’s behind that?
Alexander: It’s called “Great by Choice,” and even before cracking the book open, the title spoke to us about where we were as a company and how we would decide to rebuild the business. Service is our brand, and we think beyond the LBM industry. I posed this to my team: ‘Why not attain greatness as a business? Why not make BMC a poster child for a company that was a federation of broken parts and pieces that came together, did its hard financial restructuring, set a plan in place, put metrics in place and got people the right incentives to move their behavior toward that plan? Why can’t we be written up in Jim Collins’ next book?’ And our folks got it. They said: ‘Damn straight, why not?’ Our team gets the vision, and they believe they can do things that previously seemed impossible.