How to Decentralize Decision-Making with EOS®

Econoco Corporation

Family businesses rarely survive past the second generation, but not Econoco Corporation. Now in its 97th year, with Barry Rosenberg currently at the helm, this third-generation family business has operated since 1925.

Initially, the company manufactured shoulder covers for apparel on display in department stores to keep them from gathering dust. This was during a time in retail when inventory didn’t turn over so quickly.

Barry’s uncle bought the existing business after World War II with a loan from Barry’s grandfather. Barry’s father joined the small company as a partner 15 years later. Together, they expanded the product line to metal store fixtures and displays by being the first to import from Asia in the 1960s.

The company sold to department stores and also partnered with wholesalers with storefronts in every major U.S. city. They later added another brand – Mondo Mannequins – importing visual displays at much lower costs than domestic manufacturers.

The Three-Headed Monster

After the death of both first-generation partners, the business was left to Barry and his cousin. A short time later, Barry’s brother-in-law joined the management team. He wasn’t a stockholder but was treated as a partner. For 20 years, the second-generation leaders became known as the three-headed monster.

“During that time, everybody would go to whichever one would give the easiest answer,” he said. “They called us the three-headed monster mainly because the three managers had divergent views about how the company should be run. Somehow, we were successful in spite of our dysfunction.”

Like most multi-headed creatures, the model could not continue to support the company with so much turmoil at the top. Barry’s brother-in-law eventually left and became their competitor in the mannequin sector of their business. This caused an unfortunate rift that resulted in a fracturing of the family, one of the downsides of running a family business.

But problems still cropped up with the two remaining owners. They ran the company using the “willy-nilly, seat-of-the-pants method” (an official term, of course) with little to no intercommunication. During the good times, they experienced artificial harmony.

Ten years older and far more passive, Barry’s cousin frustrated him by not actively participating in running the business as he did years earlier. Eventually, after an unfortunate illness, his cousin decided to retire at the end of 2018. His cousin’s son is now with the company and doing great on the leadership team.

Serendipitously, this was exactly the same time Barry was introduced to the Entrepreneurial Operating System® (EOS) from a seminar available through his membership in the Long Island Chapter of Young Presidents Organization (YPO). Barry brought his new CFO Marsha Hennig who recognized that EOS was exactly what the company needed.

One Visionary, One Vision

Barry took over as sole leader of the business right around the same time he attended that presentation. They signed on with Expert EOS Implementer™ Jonathan B. Smith, and soon after, Barry became known as the Visionary. This never would have been possible with three family members leading the company.

After discovering their core values with this newly appointed leadership team, they noticed immediate differences.

For most of the first year, Barry and his leadership team got used to the new systems. Once they started filtering it down to middle managers and the rest of the staff, things really started to change. Today they’ve begun documenting all their processes, one at a time each quarter.

With the first generation doubting an outsider could help them run their business better, Barry appreciated Jonathan’s coaching style.

“He’s just one of those guys that came on with the right temperament,” he said. “He didn’t try to overpower us. He let us do the talking. He would come in with observations and nuggets of wisdom as a pair of fresh eyes.”

Surviving the Four-Headed Monster

With the three-headed leadership monster in the rearview mirror, they had to contend with a more difficult monster outside their doors. This one had four heads:

1. Clicking Buy Now Retail Transition

For years, more people had transitioned to shopping online, especially with newer companies offering free shipping and next-day delivery. The retailers in the U.S. that had not gone into bankruptcy closed underperforming stores, shrinking their footprints considerably.

2. Chinese Tariffs Affect U.S. Businesses

Enter the tariffs instated in 2018–19, most of which continue to this day. With Econoco’s products made offshore, primarily in China, they became subject to 25% cost increases.

3. When the Whole World Stayed Home

Like everyone else, retailers suffered business losses from everybody staying indoors during COVID-19. As a supplier for brick-and-mortar businesses, Econoco and Mondo Mannequins felt the impact.

4. Troubles Getting Stuff from There to Here

And, of course, the most recent problems surrounding supply chain issues. For example, delivering a container of products from China ballooned in cost from less than $3K in October 2020 to more than $25K in 2022.

The company succeeded by running on EOS, with everyone following one vision and heading in the same direction.

“EOS kept us on track,” Barry said. “We created a system where we had inventory to ship where and when it was needed. We got everything in place and maxed out our staff to zero vacancies.”

Just the same, Barry said he still looks over his shoulder, waiting for the next crisis.

Better Than Ever

Yet Econoco continues to experience immense growth in myriad ways. For example, in 2021, Econoco grew from around 55 staff to nearly 70 staff today, a 20% growth in headcount. And for the last seven months straight, they have broken sales records that have extended back 97 years.

Barry attributes much of the success of EOS to decentralizing decision-making and increasing accountability.

“In a little family business like ours, you had the owners, and you had everybody else,” he said. “And nobody was empowered to make a decision. And why would they? They could make the ‘wrong’ decision.”

As a result, every day, Barry and his cousin would have a line of people outside their doors to ask $5 questions. Now Econoco has other people making those (and much more expensive) decisions instead.

“This is also my retirement package,” Barry said. “I can go away for a month now because I’ve got our Scorecard, Accountability Chart™, Meeting Pulse™, and Rocks. And we’ve been very dedicated to staying with the program because my CFO has kept us moving forward.”

During the pandemic, the leadership team researched growing retail niches, leading them to cannabis dispensaries. They started a new brand, DisplayDispensary.com, and customized displays for the new, growing industry.

In addition, they’ve created employee engagement perks like seasonal parties and break room refreshments that created a more joyful environment. With the company’s centennial just around the corner, the team has much to celebrate.

“I’m very thankful for our CFO/Integrator® extraordinaire,” Barry said. “I never would’ve had the stick-to-it-iveness if it wouldn’t have been for her. She keeps everybody in line. I have fun coming to work every day, and everyone is engaged. I’ve got a solid 10 years left in me, maybe more, and have EOS to thank for that.”

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