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Update from Don and Robbin Flow

September 12, 2009

Don Flow is president and owner of Flow Automotive, 31 automobile dealerships across North Carolina and Virginia, which are known for exemplary ethical practices. Flow Companies employs over 900 associates and operates 31 award-winning, highly respected dealerships. In recent months, the company was recognized as the top Honda dealership and runner-up among BMW dealerships in the country for customer satisfaction.

Ethix featured an in-depth conversation with Don Flow in the March/April 2004 issue. When the economic crisis came in September 2008, the automotive industry was one of the hardest hit. We did an update with Flow in the March/April 2009 issue.

John Terrill, director of the Center for Integrity in Business at Seattle Pacific University, had the opportunity to visit with Don and Robbin Flow on September 12, 2009, to gain their perspective on the economic recovery process, as well as some personal reflections on what they’ve been learning about leading in crisis.

Ethix: In the March/April 2009 issue, you provided some important insights on how to lead during crisis. And as we know, the economic fallout of the last year has had dramatic impact on the automotive industry, including Flow Automotive, which has a number of General Motors dealerships. What have you been learning that might be helpful to other leaders?

Don Flow: I discovered how critical it was for us to get everyone on the team involved in helping us improve our business operations through the crisis. One of the ways you avoid paralysis in a time of crisis is to engage in meaningful activity, and for us that was reexamining everything we do to find ways to improve our business so that we can better serve our customers. A key question we’ve asked continually over the past year is what can we do to create more value for our customers? We’ve always asked this question, but during the last year when both the sales and service sides of the business have been down dramatically, we decided to drive more deeply into the organization to address this challenge.

To do so we formed teams at each of our dealerships to deal with this important question. We also developed web-based tools to solicit feedback and involvement. By engaging everyone in this process, we found that many new ideas emerged. The process has changed our culture. I can hardly walk into a dealership without someone approaching me with an idea for process improvement. The process of forming teams and having these kinds of discussions was a stabilizing activity for us, and we need to find ways to maintain this level of involvement after the crisis subsides.

The conversations also allowed us to refocus on core values, such as respect for the intrinsic value and dignity of all employees, customers, and community members; and responsibility and accountability to all company stakeholders in running our business.

During these last months, we’ve really tried at each turn to share important information with our employees. This has helped them feel valued, and has provided some sense of control for them during the crisis. Even though business was down dramatically, we also increased our investment in our employee assistance fund this past year, which was important given the challenges all of us have faced.

One of the things going forward, as conditions improve, is to find ways to create opportunities for professional growth and promotion. A period of contraction, like we’re going through, creates opportunities for our team members to step into positions of increased leadership and responsibility. We want to take advantage of this situation and be a place where employees can develop as leaders.

Robbin Flow: I think the other thing you learn during a period like this is how important periods of rest and networks of deep, personal friendships can be. We have a little farmhouse outside of Winston-Salem, which has been a refuge for us during this past year. Building in a rhythm of rest is one of the best ways to maintain perspective. Don will chop wood and clear brush while there, and we’ll both spend time together bicycling country roads. There is tremendous emotional drain that comes during seasons of intense ambiguity. As I reflect back on our weekend retreats at the farm, it is interesting to note that Don’s Blackberry never seemed to work properly while we were there. We’re both glad this was the case.

The other thing that has helped us survive is deep friendships that provide perspective. We have a group of friends we meet with weekly. Without this community, I am not sure we could have survived this past year, which has been one of the most challenging we’ve faced.

There was a lot of talk in the press about the Cash for Clunkers program. How did it affect your business?

Don Flow: The program produced a lot of sales for us. One of things that didn’t get covered by the press, and was not originally intended for the program, was how helpful it was to a percentage of American workers who are dependent on personal transportation for commuting purposes. Probably 20-25 percent of the cash-for-clunker sales we made were with customers who had been deeply buried in the subprime loan mess but who are also dependent on personal transportation to get to their places of employment. The $4,500 incentive allowed many of these customers to buy a $15,000 new car at a prime rate, which lowered their financing costs considerably. Rather than owning a clunker that required considerable ongoing maintenance costs and was not dependable, they were now able purchase a new car at comparable or lower costs. And when paying off the loan, they own an asset with significant residual value. From our perspective, it felt great to work with this segment of our customers. Helping customers take advantage of program benefits, break a cycle of subprime loans, and get into a dependable automobile at lower costs was really gratifying for us.

What other insights have you gained during this last year that you’d like to share?

Don Flow: I really hope some of the processes we’ve put into place will guide us for the next five years. I think the whole experience has really changed the way we think about risk. We’ve always been careful, but going forward we’ll keep more cash on hand. We’ll also try and find ways to better assess and plan for risk in our business. I don’t think this is unique to the automotive industry. I think businesses across the board will approach risk a bit differently. We’re faced with some of these decisions right now, in fact. It is time to start planning for the second quarter of 2010, when most economists predict that the economy will pick up steam. I’m wrestling with how to expand our outlets and inventories given where we’ve been.

I also think it is going to be important to find ways to maintain the same sense of urgency and discipline we’ve pursued this past year. Our business is better today because of what we’ve been through. In the years to come, we need to find ways to accelerate our learning curve so that we can continue to create value for our customers and stakeholders.

Interviewed by John Terrill

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