Leadership Game Plan: Interview with Andrew Berlin CEO of Berlin Packaging

What is so impressive about the packaging industry? Let alone another packaging company? I mean it's a utility if you need to package something search Google and pick any company? Right?

Well, that is what I thought until I spoke with Andrew Berlin CEO of Berlin Packaging. Yes, the fundamentals of the packaging industry are similar but what separates Berlin from its competition is their WHY.

Over the last three decades, Andrew has not only built a $2.3 billion company but has made WHY the company’s primary value add. And why is Berlin Packaging in business — to make their customers more successful.

Yes, it sounds simple enough but when you had $11 million to pay back it’s understandable to focus on revenue. Graham Stanton, President of Peloton Cycle, grasps this issue all too well, “The harder part is foregoing short term revenue in order not to jeopardize the long term.”

And it takes a strong leader with a grand vision to embrace that reasoning. So let’s read about Andrew Berlin and his philosophy on leading Berlin Packaging.

A leader, on the other hand, handles what is unknown. They inspire, innovate, and develop. They think long-range. They challenge the status quo. Much of this has to do with people. Leaders need to be “force multipliers” – an agent that amplifies effort. A leader who engages people – focusing on the right inputs and behaviors -- will be much more impactful than one managing outcomes.

So Andrew, what is your story?

I’m a passionate, competitive person. Back in 1988, I was a 27-year-old lawyer looking for a change. My father, Melvin Berlin, and I came across a floundering packaging company, and he decided to take a gamble with me. He purchased the company for $500K down and another $11 million, which we borrowed.

Having that ratio of debt on a company helped us get very focused very quickly. Fast forward, and I’ve spend the last 28 years growing this company, now known as Berlin Packaging. Our team here has been successful – we’re now valued north of $2.3 billion – but not without plenty of bruises and lessons along the way.

One of the biggest lessons I’ve had is on the importance of people. Anyone can have a great idea. But to get that idea adopted and implemented takes a team – and to do it with precision and excellence takes a great team. What drives success in the packaging business isn’t patents or special technologies, it’s execution.

So I decided early on that the right competitive advantage to foster was one around recruiting the best people – those that have the right traits. And then to engage those people with leadership, training, rewards, and a chance to grow.

When this all comes together, we’ve seen our team do incredible things for our customers that create real income for those customers. This, in turn, creates amazing customer loyalty back to Berlin Packaging, helping us grow. Without the people and a performance culture, we wouldn’t be able to grow organically 10x faster than the packaging market.

How do you inspire innovation? How do you frame the challenge in terms so daunting that no one (yet) knows how to solve the problem?

Our tagline is Anything is Possible. This sense of optimism is core to how we operate in the marketplace.

Think of the people who did something that, up to that point, was thought impossible. Maybe it’s the Wright brothers with the first sustained, powered flight. Or the builders of the Empire State Building who erected the tallest structure on Earth. Or Chuck Yeager who broke the sound barrier. Or Mark Zuckerberg, who’s Facebook is now used by 25% of the people on the planet. Or Sam Walton, whose company went on to earn more than $1 billion in revenue per day.

These accomplishments go to show that even the impossible is attainable with the right energy, imagination, and desire. This is a way that I inspire action. There is a way, we just need to find it.

At Berlin we absolutely focus on product innovation.

For example, we have our Studio One Eleven design team that creates amazing new packaging for our customers. They handle brand strategy, custom structural package and closure design, product design, and visual branding and packaging graphics. The goal is to make something that resonates with consumers while respecting all the realities of the supply chain. Our Studio innovates and makes products that work.

Apart from products, we also focus on process innovation. I’ll talk more about that below. The point is that we are not afraid of thinking differently and seek ways to make our company, our customers, and our other partners better off.

FYI -- Walt Disney was turned down by more than 100 banks before one agreed to fund his dream of a theme park in a swamp.

Why do you do what you do? Put more simply, what is the WHY that differentiates the simple businesses from the purpose-driven business?

I think the WHY is so important in differentiating our business. But let me start with the WHAT and the HOW first.

There are many companies that sell packaging. So WHAT we do commerce in doesn’t set us apart. But when you get to HOW we operate, that starts to be more interesting. We begin by putting the customer first – our whole mission is about increasing our customers’ net incomes through our packaging products and services. This is different.

But then we’ve gone on to create a unique business model – what we call a Hybrid Packaging Supplier.

We bring together the best elements of packaging manufacturers, distributors, and income-boosting service providers. We have all the knowhow of a manufacturer, but we don’t own machines. We outsource our manufacturing, which gives us flexibility to perfectly match the technology to the application.

We’re also experts at logistics and inventory management. We are in the inventory business so our customers don’t have to be, and this saves our customers millions of dollars a year and frees up tons of cash flow for them. And we also offer services that are designed to assist our clients with improving their net income by focusing on increasing sales, lowering costs, and improving efficiencies.

For example, we’ll loan money at 0% interest for our customers to make capital purchases. Or we’ll offer our design and engineering experts to revitalize a lagging product or bring a new brand to life. All of these services are offered at no charge in exchange for packaging business.

In this way, our mission is to make our customers more successful. Packaging is the currency we use.

We’ve laddered this up to an even more emotional level for our WHY. We exist to help people and companies become Greater, Faster. You can see more about this at www.GreaterFaster.com. We try to understand why our customers exist, what truly motivates them. Both the company overall, and the individuals we’re working with. More net income is usually a vehicle to something grander. We strive to help our partners achieve those goals.

You can see that this is a far, far cry from selling packaging in a “three bids and a cloud of dust” model, which is where we started three decades ago.

How do you get your new employees to buy into your “why?”

Many ways, but I’ll highlight three.

First, we recruit people who exhibit the traits that predispose them to love our WHY. We want employees who are smart, optimistic, creative, customer-minded, and dissatisfied with the status quo. We’ve gotten very good at finding these people. We can always teach skills, but we cannot change someone’s fundamental traits.

Next, we share. We share our vision and our goals with our employees. We share the strategies we’re undertaking and show how each employee fits in. We share how we’re doing. Every employee is trained how to read an income statement, and every month they see how their business unit is performing.

Finally, we reward. Our WHY of Greater, Faster certainly is about our customers. But it’s also internal as well. Every employee is incentivized on how Berlin performs. We have a profit sharing plan where employees can earn sizeable quarterly bonuses based on how their business unit – the location where they have the most impact – performs.

So we’re committed to helping our employees be Greater, Faster themselves. I love seeing huge payouts to employees who are contributing to our company’s success. It’s a win/win/win for the company, the employee, and our customers… and you can add another “win” for our suppliers as well, since they grow as we do.

Do you think that a leaders’ primary goal is to manage the results or manage the people that get the results?

I think a manager handles what is known. They organize, coordinate, administer. They think more short-range. They are operating often within guardrails.

A leader, on the other hand, handles what is unknown. They inspire, innovate, and develop. They think long-range. They challenge the status quo. Much of this has to do with people. Leaders need to be “force multipliers” – an agent that amplifies effort. A leader who engages people – focusing on the right inputs and behaviors -- will be much more impactful than one managing outcomes.

This focus on people is proven to work. There was a great study done by Professor Jeffrey Pfeffer of Stanford Business School. He studied the top growers from the New York Stock Exchange over a twenty year period. He looked between 1970 and 1990, which incidentally had a couple of recessions and slower economy.

Jeff found five companies that performed very well – in fact, they were able to increase their value by more than 15,000%. What’s important are the common denominators across these five companies. Surprisingly, he found that all five his companies were in somewhat stable, staple industries. These were not your high-tech, trendy industries that were protected by patents and were full of new inventions. They were rather simple, straightforward organizations that were not known for being necessarily innovative.

The five companies he discovered were: Wal-Mart, Circuit City, Plenum Publishing, Tyson Foods, and Southwest Airlines.

And all these companies, with the exception of Circuit City, are still thriving today. (I’ll note that Circuit City fell from grace when they changed the strategy that got them to the top.) So what was the secret sauce?

Well, it turns out that -- out of all the functional areas -- Human Resources was the function that every one of the five companies excelled in. People. These companies each had a culture with an emphasis on growth. They also had an emphasis on fun -- not fun in lieu of work, but fun while working. They also focused on leadership training as well as having a clear path for growth for employees. And they also offered superior rewards for superior performance.

This work had a huge impact on me and play a lot into how Berlin operates today.


Original Published on the Huffington Post.