PSS World Medical

PSS World Medical

How AN ORGANIZATION with ordinary people achieve extraordinary result in the medical supply (distribution) business?
and

WHY?
Environment – Consistency – Action

Agenda • Introduction: Why the Article on PSS? • Overview of PSS and its key Achievements • WHAT. HOW and WHY of PSS actions – Singling out CSFs • Conclusion: KM++ Lessons Learned .

entrepreneurship . it is very usual that we will mention about 3 topics: • Business: what business are people in? • Industry: what is the industry environment? • People: leadership.Introduction • When it comes to any business in the world.

Highly competitive.Not with ‘elite’ education background (e.The founder Pat Kelly is a ‘reluctant entrepreneur’ not a pioneer .g.Little background of PSS • Business: Normal Medical supplier • Industry: The distribution of medical supplies ----. MBA) -----. low-margin industry • People: Ordinary / regular ----.

Motivation of this article (1) • Apparently. low entry barrier 2. People: ordinary / regular people • However…… • This group of ordinary people have achieved Extraordinary result in the medical supply business . PSS has Nothing special or does not looks like a highly competitive company at all. Industry: highly competitive and low profit margin 3. 1. Business: is normal.

its fiveyear growth rate in revenue is 52% and earning per share is 31% PSS World Medical’s growth has been achieved largely by acquisition PSS World Medical’s growth in sales is almost 60% per year from $170 million to $1.5 billion .Motivation of this article (2) • Started from 1983 As of late 1999.

instead of seeking and depending on talents (Just like Southwest airline. the common factors why they can succeed but other companies can’t are: Environment – Consistency – Action .Question • Q: How do ordinary people can achieve extraordinary result in the medical supply business ? What are the mysteries???? • A: PSS knows how to leverage their employees’ talent. and men’s warehouse do). • If we recall all these companies.

…) … to do with the environment with which the knowledge source operates OR the circumstance within which the source functions Looks familiar ???? Yes. regulations.Environment • • • • • Culture Climate Esprit de corps Rules. policies Availability of time (for reflection. Lee regarding Knowledge source . it is one of slides from Prof.

Environment • Yes. Environment is one of the knowledge source/asset for any companies. • And PSS has extraordinary achievement for creating its own environment in order to leverage their employees’ talent Environment – Consistency – Action . in K6211.

Our Presentation Focus Environment – Consistency – Action To understand how PSS creates an environment that can be used to greatly leverage their employees’ talent and contributes effectively to the success of initiating/executing/integrating acquisition. These two are the reason why PSS does not need MBA talents and can achieve miraculous growth! .

not managers (producing/nurturing/deploying leaders. employees’ salary or bonus) • Give people authority and accountability • Share wealth . but not managers) • Notion and practice of Servant Leadership • Runs an open company .Any questions that is legitimate must be answered (e.Environment (1) • A business and organization run (led) by leaders.g.

complete discretion to set prices determine its operation . with its own P&L. responsibility for gross margin.Environment (2) Organization structure • Flat • No written organizational chart • Each branch is equivalent to a small business.

and none therefore) Only have a guideline in a large. colorful foldout brochure called ‘Rules of the Game’ 7 areas: Equal opportunity Sexual harassment Rules of conduct Alcohol. Drugs.Environment (3) Organizational Policy • • • No policy manuals (but emphasize on personal communication) No memos (Kelly’s rule is that everybody is required to read the first memo they get each month. Firearms Absence of unions Leave and holiday Complaint resolution procedures .

(The candidate must call for a follow-up interview) Often interviews will be done on Saturday. no need graduate degree) Recruiting is based in large measure on personal referrals (PSS gets new employees from the informal network among their existing employees) The hiring process takes 6 – 8 weeks. if they are hung over from Friday night A behavioral interview guide with 30 questions for the interviewer to screening applicants • • • • • . No to call people back for interviews after the first recruiting contact.Environment (4) Recruiting and selection • Credentials are not very important in PSS (no need from elite institutions. to see if the people will come in.

Environment (5) Training • PSS university Role playing During training. . or they will stay at the homes of people who staff PSS university and even at the homes of officers Need to have dinner with each other and with corporate officers • There is 12 weeks of field training ----. people stay at corporate apartments instead of hotels. To learn from the bottom up.do all the manual work from cleaning bathrooms driving trucks stocking warehouse shelves. etc.

no manager titles.Environment (6) Leadership • In PSS. but many leaders • No many want to be leader. guiding other team members) • Losing some job security because leaders are expected to do much more . and moving into leadership is very much a voluntary decision • Because the meaning of leader in PSS is clear in below • Giving up freedom • Less financial gains (depending on team’s performance) • Become servant to the team members (responsibility for mentoring.

not the leaders • The branch can receive up to 20% of bonus pool. another 5% if it keeps its asset days below a target level. final 5% if it can exceed the target by 2% of net income. can get 5% for hitting the target. can get another 5% for exceeding its dollar objectives. the reward is great and very encouraging teamwork. not individual) . (In short.Environment (7) Rewards • Bonus is paid semiannually • The bonus pool is shared among employees.

AREN’T YOU CURIOUS ABOUT …? .

Penny Stock Exposed http://www.istockanalyst.com/article/viewiStockNews/articleid/4840106 Rank #89 PSS World Medical. Since its inception in 1983.30 . PSSI is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management. Although still a challenging environment. Mario Gabelli of GAMCO Investors. Raises FY2011 GAAP EPS Goal to $1. Steven Cohen of SAC Capital Advisors.$1. revised earnings guidance for the fiscal year 2011. the combination of these factors led the company to raise its guidance to earnings per share goal of $1.32 billion. PSS World Medical Reports Results for Fiscal Year 2011 Third Quarter. PSS has become a leader in the two market segments that it serves with a focused market approach to customer services PSS World Medical Inc. .6. Pss World Medical Inc. Cash flow was strong and executed on acquisition strategy. its shares were traded at around $23. Kenneth Fisher of Fisher Asset Management. Jim Simons of Renaissance Technologies LLC. Expense management was prudent in principal based. Larry Robbins of Glenview Capital.Oct 2010 http://www. LLC. had an annual average earning growth of 16.GuruFocus.realpennies.How is PSS doing today? PSSI PSS World Medical .32 Per Diluted Share http://www.gurufocus. has a market cap of $1.com .32 for fiscal year 2011.com/news.php?id=113417 Rank #243 Pss World Medical Inc.4 with a P/E ratio of 20 and P/S ratio of 0.3% over the past 5 years.com/otc/PSSI Rank #68 PSS World Medical Inc. is a national distributor of medical products to physicians and extended care providers through its two business units. Inc. Reports Operating Results (10-Q) -.30 to $1.

Three elements for this KEY • Environment (culture. regulation.Conclusion • The KEY is about how to leverage employees’ talent. policy. structure. etc) • Consistency (all the above must be consistent) • Put in action (Do it ! Consistent managing practice) . system.

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