Summary:
Tune in to hear candid interviews with leaders in the U.S. agribusiness industry to get their take on what it means to not only work “in” the industry, but work “on” the industry as well. Scot Hillman, Vice President and Chairman of the Board of J. D. Heiskell & Company, sat down with us to discuss his thoughts on leadership in agribusiness. From being a part in giving back to local communities to empowering future leaders in agriculture, these movers and shakers are making an impact across the board.
What you will learn in this episode:
- The importance of being involved in local communities
- The value of NGFA committees
- Thoughts and advice on successful leadership
Relevant links:
Listen to the podcast:
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Transcription:
Mike: Hello, this is Mike Terning. Welcome to another episode of Outstanding in the Field, a podcast by Greenstone Systems. Today our theme is leadership. I am going to be having a conversation with a leader in agribusiness who I’ve never met before, but I’ve met quite a few of his colleagues within the business he operates. His name is Scot Hillman. Scot, can you please introduce yourself to our listening audience today?
Scot: Yeah Mike. Scot Hillman. I live in Tulare, California. I’m the chairman of the board for J.D. Heiskell Holdings, which does business as JD Heiskell & Company, a 135-year-old ag business.
Mike: Well 135 years. That’s a pretty good start, isn’t it?
Scot: Yeah, yeah. We’re just starting to figure things out here a little bit. I really appreciate you having me on today. Thanks Mike.
Mike: Well, thank you for being willing to spend some time with us today. We really appreciate it. We know you could be in many other places. So thanks for carving out this time for us. So Tulare, California is in the heart of the San Joaquin Valley in California, correct?
Scot: That’s correct. We are an old California family. One branch of my family actually came here as part of the Donner party, which wasn’t a success story. So I am now a sixth generation Californian.
Mike: Wow. That’s fantastic. So for those in our audience who haven’t been to central California, can you just describe a little bit of what goes on there in the San Joaquin Valley?
Scot: Yeah Mike this is ag country. You think of California mostly as Hollywood and beautiful coastline and big cities—San Francisco, San Diego, Los Angeles—but where we are is…In our county, in Tulare County, there are more dairy cows than there are people. So we’re a big ag county. I think California in general is the world’s eighth largest, maybe ninth now, ag economy. It’s funny. It’s kind of like upstate New York. It’s very agrarian. Central California is the same way. It’s ag country. Ag is what we do. So we’re in the part of California where you see a lot of horse trailers and a lot of orchards and row crops. It’s good ag country.
Mike: Yeah, I think my visits to central California about anything seems to be able to be grown there. There is one constraint though that you Californians face and that is—well, at least one that I’m aware of—and that’s water, right?
Scot: Yeah. Water is a big thing here. All the crops are irrigated. There’s not enough rainfall here. It’s essentially a dessert. So we do have to drill for our water. It is scarce. There are people who bought water rights and are sitting on them because in the future there’s going to be a lot of value there.
Mike: Well your business is pretty diversified not only operationally but also geographically. A little bit about the business itself. What would you say is your core business line that you serve? The related customers or markets?
Scot: You know, I used to always think of our business as a feed manufacturing business because that’s kind of how it started out a long, long time ago. Actually up until about the year 2000 that was what we did. We were a purchaser of commodities, and we turned those commodities into dairy feed. We had a manufacturing feed in Tulare in central California. We’re just about 50 miles south of Fresno to kind of peg us to the nearest big city. We made feed for the dairies around here. As most people know, there are lots of them in our county. In the year 2000, we purchased a regional competitor. So we got large enough that we had to scale to become commodity originators. So we started a trading office in Omaha, Nebraska and developed a new core around trading the commodities that are the part and parcel of our feeds. So we became a commodity originator and trader along with our manufacturing capabilities. So those two things also morphed into a transportation business. So we do quite a bit of transportation around getting those commodities to the places where we manufacture. So we kind of have a three-legged stool of core competencies now that are basically those three things. We do have an interest in ethanol plants. So we’ve got a little fourth thing out there on the side that’s near our core because we do all the trading around that. Yeah so, we do also export of those commodities. So we have that commodity piece, the trading piece, the manufacturing piece, and the transportation piece.
Mike: Okay. Well fantastic. So Scot, did you grow up then in Tulare?
Scot: Yeah. I’m a lifelong Tularian. I was born here 62 years ago, and I’ve really never left. I went away to college for four years and then I came right back. Kind of along the direction of my dad jumped right into the business. It’s all I’ve done for the last 45 years. It’s a different path than we’ve kind of devised for our future generations, but I’ve been in this business exclusively for 45 years as of July this year.
Mike: Fantastic. Growing up in Tulare then, did you work in the business as you were in high school?
Scot: Yeah, actually I did. That’s how I get my start date back to 45 years because really, I got out of college in 1980. So I would have been working full time since then. During my high school years, I cleaned out pits and bagged feed, and worked in the retail store, and did a lot of sweeping and shoveling as most high school kids should. So I kind of learned the business from the ground up. Rode around with the delivery drivers and got to know the customers. I just kind of got a feel for the business. Then went off to college and came back and got to work.
Mike: Yeah, yeah. 1980, interesting years. It wasn’t one of the brighter spots for ag back then as I recall. So what went into your decision to return to the business?
Scot: You know, that’s a really great question Mike. I think I always wanted to do it. I think I’ve always been intrigued by just this business and its heritage in our family. You know it was founded by my great-grandfather, went to my grandfather, and then went to my dad. My great-grandfather and my grandfather were actually on my mother’s side, but my grandfather had two daughters and one of them never married. So he actually—My dad was a farmer and came in to work for his father-in-law at the time. I think that would have been about 1953. So that’s how the Hillman’s got in the Heiskell business. His name was Dale Hillman. I grew up with this business kind of in my DNA. Around the table at night, we would talk about the business and the customers and what my dad did. I kind of fell in love with it. So I went to Stanford, which is a university up in the Bay Area. They don’t have an ag major. I think the closest thing you can do is major in econ, which is what my son did when he went there. I majored in African history and the film and broadcast communications with the possible outside chance that I would be a film critic, which was good. I think I learned a lot about writing from doing that. I think writing is an important role in communication. I didn’t have an ag college education, but I always wanted to do this job. So I kind of came back to it and learned it a little bit by the seat of my pants. I wish I would have gotten an MBA or some kind of formal business academic training.
So early on in my leadership here when I came back I kind of made it a priority to paint some bright lines around future family involvement. So now we require any family members coming into the company to have worked a minimum of five years somewhere else preferably in a profession or an industry that’s ancillary to ours. They need to be invited into the business to perform a needed role and not because their name is Hillman or they’re of our lineage. My son, who’s now our CFO, was the first to kind of join the company by following that path.
Mike: Oh okay.
Scot: He went to work with a private equity firm in Manhattan for five years that did a lot of ag lending. So he got a good education in international finance. We went looking for someone to put on the bench behind our CFO at the time. His name came up and we hired him.
Mike: So you literally got grandfathered in.
Scot: I did. I did. Literally, that’s how it happened. It is. That’s how it happened. The change needed to be made to modernize that technique, but I think a lot of people in my day got grandfathered in or fathered in.
Mike: Well that’s interesting. I did not know that was your major. African history and film and broadcasting.
Scot: Yeah. I got two degrees and neither one of them had anything to do with ag. Not even close.
Mike: Well, that must have been quite the education then on the job. Obviously, you grew up close to the business and knew quite a bit about it. Let’s explore a little bit. You started back in the business in 1980. How did you rise up through the business? What sort of roles did you take on in 1980?
Scot: Yeah, I think my dad kind of had a plan for me. The first thing I did was work in kind of the retail side. We had a little retail store. A little farm and feed store that was part of our business. I kind of ran that for a bit. Then I came into the office and became a buyer for the mill. We didn’t do trading then. We were only procurement agents employed by the company to keep all the components of our manufactured feeds—keep the pipeline full for the mill. So I spent a lot of time purchasing local feed grains that were raised around here as well as stuff that came in on the rail and then all the micro ingredients that go into dairy feeds. I did that for quite a while. He had a consultant come in and work with me a little bit on the accounting side because that wasn’t my strength. I never did a lot of that. So that’s kind of helped me understand the P&L and things like that. I just kind of grew up into the business that way. My dad retired in 1991. So I would have been here for about 10 years. For the next 10 years, I kind of ran the show with the help of—Someone else came in to do the trading that we had hired right before my dad retired. We grew and grew.
In the year 2000, we bought out a regional competitor. It was interesting because now all of a sudden our company—The competitor was three times the size of our business. When we bought that competitor, they had facilities in two other states—in Washington state and in Idaho and in southern California. So all of a sudden we went from having one little feed mill in Tulare, California to having four locations in three states. To get enough product in for those locations, we started an office in Omaha, Nebraska to originate grain. Hired a guy back there, and the business just to be honest got to be—as they say in the south—more bacon than the pan can handle. We brought in a professional outside, the former CEO of Scooter Grain Butch Fischer. He brought with him about six months later his CFO. They took over and I credit them to really launching this business into what it is today and diversified. They brought the commodity trading piece. He worked for Scooter which was principally a trading company. We had a manufacturing background. So it was a good marriage. He was a big time CEO. They brought real leadership here that I’ll always be grateful for.
Mike: So a leadership principle that I just heard is surround yourself with good people.
Scot: Oh yeah. That has worked well.
Mike: Yeah. I was once put into a role where I didn’t know much about it. My hiring manager said, “Mike, the key here is surround yourself with good people.” Never forgot that.
Scot: Yeah, no. I 100% agree. The people have been the success story of our business. We’re a very people intensive business. Our trading and our leadership, that expertise that you get the best people you can, and they’ll take you where you want to go.
Mike: Yep. Get the right people on the bus, right?
Scot: Exactly. Yep. Thank you, Mr. Collins. He was my classmate at Stanford, Jim Collins. He was in my class.
Mike: Is that right? Did he always ask inciteful questions during your classes?
Scot: No. You know, I did not even know he was in my class until I went back for our five-year reunion, and they had him as one of the speakers in a class panel. I was like, “Jim Collins was in my class?” I missed a chance to sit in and really get some good business incite.
Mike: That’s interesting. I’ve enjoyed his books.
Scot: Oh boy yeah.
Mike: Great incites. Yeah. Well, fantastic. So buying a company three times the size of your business at the time. Describe to me that decision making process. Who did you involve? How did you make that decision?
Scot: Oh boy. It was a step of faith. We knew we needed to grow. We knew that consolidation was the future, and we did not want to be consolidated. It was a huge step for our company. We made a big financial commitment that involved some lenders and a lot of leverage. Honestly at the start it was really difficult. It was a little bit of a hostile takeover of a close competitor. They weren’t happy about it. So that created additional obstacles to us. It wasn’t a smooth transition. So the decision itself, I think, was sound. The execution of it was a real challenge, but we kind of fought our way through it. I think just our will to make it happen prevailed. We ended up creating enough scale to bring in an origination trading business to feed it that ended up being a very successful business. In a couple of those early years, the trading business that we brought on to supply the manufacturing business was actually more profitable than the manufacturing business and kind of got us to the point where we got everything running in sync and we survived. That’s what I can tell you about that. We survived.
Mike: Well, what was one of the largest learnings that you had from that experience?
Scot: Oh boy. Perseverance was one. I think relying on hiring good people is really what came out of that. Relying on those people. It was a difficult decision to bring in the first non-family managers in 110 years. I think doing that made us as a family, me as a leader more comfortable with hiring the people the business needs without letting your ego kind of get in the way. So that was a good learning for me.
Mike: Wow, that’s very interesting. Thanks for sharing that with us. Well, you’ve not only grown the business significantly at JD Heiskell, but you’ve also served the industry in various ways Scot. Kind of describe to us what you see as the value a leader can bring to the industry. I know you’ve served on the NGFA for a number of years and in other organizations. What sort of value can a leader bring to the industry that they’re involved in.
Scot: Oh boy. I think that’s a great question. I think the first thing that a leader can bring in a community role or an industry role or any role…I mean those roles are tough to recruit. So anybody who’s ever tried to recruit members for a non-profit board, or the next president of a trade association or board member knows how difficult it can be to find people who will dedicate their precious time to a role like that. I think a lot of the value you can bring is by showing up and bringing your perspective because that perspective creates a wide pool of perspectives. I’ll take our trade association. It’s a Midwest based trade association because most of the grain trading and manufacturing activity that takes place in the United States kind of is based in the Midwest. So for me to bring the perspective of a California manufacturing and trading business, we’re in a whole different regulatory environment out here. We’re in a whole different geographical environment. So I think the value of being involved in any kind of community or industry association is the perspective you bring, and the things that you learn from the perspectives you’re going to hear around the table, which you bring back to your own business and bring into your own leadership style. So those two things are important to us. I think you can bring value. We tell this to everyone in our organization. We encourage them to be Rotarians or Kiwanians or soccer coaches or chamber of commerce board members. You don’t need to be in a certain place in our org chart to be a leader. You can create value by creating a model of high integrity, service, kindness. Whatever your role in, just become an example for others to follow. It’s kind of a mindset.
Mike: Well, you just mentioned a few traits of leaders. Specifically your view is agribusiness, but of course these things will apply beyond agribusiness as well. You mentioned service and integrity. What are some other characteristics that you look for and place a high level of value in when you’re looking for leaders within your business?
Scot: Wow. Trust is a big one. It’s not the biggest one, the ability to build trust. Someone I think would be able to build trust whether shareholders, our employees, their superiors, their subordinates, customers. I think that’s huge for anyone with leadership responsibilities, especially in a family business like ours. I think there’s some level of implicit trust that’s assigned by customers to a family business is they trust you because you’re kind of family. As leaders in this kind of business, we do our best to build and deliver on that trust. So I would look for someone who has that trust worthiness. As a leadership team, we need to trust each other. That makes for good communication, transparent and open communication. So trustworthiness for sure. I guess another one would be flexibility. Maybe creativity is a better word. We all got put to the creativity test during the past eight months, right?
Mike: Yes.
Scot: The most successful business during the pandemic seemed to be those who’s leaders found solutions or ways to pivot or new markets and pipelines or ways to deliver their product. Different ways to skin old cats. I think creativity is underrated as a leadership trait. Myself personally I like humility in leadership. I like team players. I like consensus builders, not autocrats. I like leaders who are aware there are consequences to their decisions on the people they lead, and they consider those people under their influence or in their area or responsibility through a filter of those people’s wellbeing. Kind of creating optimum conditions for their performance. We want JD Heiskell & Company to be a place for opportunity for our employees. So a humble leader, I think, will maximize the opportunities of the people that work for them. As company leaders, we talk all the time about being a good host for people and the business we want to add to our brand is being a good place for them. We’re a people-based business. 100% of our success is based on people. There’s a saying I like that a leader is best when people barely notice he exists. Like when his work is done, his aim’s fulfilled, all the people will say we did this ourselves. That’s good leadership. I like that humble leadership.
Mike: That’s fantastic. Well trust, flexibility, creativity, and humility they can go a long way to serve leaders and their followers. For sure.
Scot: Yeah, I think so.
Mike: Well, following some of your social media outlets for your company, your team does a pretty impressive job of serving in their local communities. I know you’ve had some challenges with fires not too far from you this year.
Scot: Yeah.
Mike: Describe to the audience kind of some of the leaders that you’ve seen rise within your business to meet with some of the needs of your community this year or recently.
Scot: Yeah. We have a feed store here. We used to have it on site at our feed mill, the one I worked at years ago. So we moved it off site. We have it in a nearby town. It’s a feed and farm store. We actually have a new manager there, Laverne Papagni who managed that store for 20 years. Turned it over to a woman named Kayla Munoz. Kayla’s doing a fabulous job. She took the initiative to ask her customers if they would consider buying seed for the disenfranchised animals, animals who were kind of orphaned by the fires and brought down out of the hills to holding locations down in the valley here. She took that and ran with it. Contacted the local Farm Bureau and had this pallet out there where people could buy dog food, horse feed, whatever and put it on that pallet and then the Farm Bureau came and took the pallets to the holding area. So I was really proud of that effort. It was very grass roots. It was in keeping with kind of the DMA of our business. You know my great-grandfather who was our founder made unofficial crop loans to his farmers years and years and years ago. While that obviously served his business, it kind of showed his heart for the community. He was just a giver. He was a big-hearted guy. He went on to be a well-known benefactor in the Clary County area. Our successive generations have kind of followed that example. So as our business grows into new geographies, we’ve become more involved with the communities that we grow into. It’s a big part of our value set. We try to make it part of our cultural DNA. We have regional charitable committees. All of our regions have a charitable committee comprised of employees that meet monthly and review funding requests because we like having that wide range of influences and interests and job classes involved in that decision making. So we give a lot of people a chance, as the original question stated, a lot of people a chance to rise up as leaders in giving.
Mike: Is it fairly easy for team members to get involved? Do you encourage rotation within roles on those committees? How does that work?
Scot: Yeah definitely. I think those roles are a little bit prized because they’re spending someone else’s money and it feels good. They have a budget, and they come in and say well we should be doing this, we should be doing that. This is something we should do. We probably shouldn’t do this because it doesn’t really serve our community. It’s a lively and spirited debate around the table at those meetings. It’s good to see and really good point. Yes, we do rotate those committees. We have people from the production, from the mill, people who are unloading train cars, and people who are making sacked feed, and people who are driving trucks and they’re all on the committees. It feels good to see leaders at every level being involved in those decisions.
Mike: So how many people are involved with these committees at any given time?
Scot: Here in California there’s about a dozen, I think. We meet for lunch once a month. Our corporate services coordinator, Amanda Flora, she puts an agenda together. She collects all the funding requests and puts them on an agenda, and we discuss them, and then we eat lunch together and talk about what we did.
Mike: Okay. So then you have these in your–
Scot: Yeah. There’s one in Amarillo, one in Omaha, one up in Idaho, one up in east coast with our northeast businesses. Yeah so, we’re—And then one in Iowa. We have a business in Iowa that has its own committee. So it’s great to hear what they’re doing too. We try to get those things, like you said, onto our social media, into our company newsletter. That feels good.
Mike: So do the committees have quite a bit of latitude in forming the criteria for the funding request or is that sort of…?
Scot: Yeah. Yeah, no. I think the mandate is a little bit to support and make sure those are local community-based locations. That the charitable causes are within the community. Yeah as long as they kind of follow—That’s kind of our mandate here in California. If we get out of area requests, we probably don’t fund those as often. We try to really support the communities where we live, work, and play.
Mike: Okay.
Scot: Other than that, it’s kind of wide open.
Mike: Well that’s pretty cool. I’m sure some of our listening audience will be very interested in implementing something like that if they haven’t already in their own businesses. You know, I’ve been to your Tulare office Scot. It was probably 12/14 years ago. Something like that. Yeah. Met with more of your IT finance staff because that’s how we relate to your business in a lot of ways with our software products. One of things I remember going in there was a sign on the wall that said something like the right feed at the right place, the right quantity at the right time.
Scot: Yeah. The right feed, the right time, the right place. It’s funny. We sit around tables and try to come up with mission statements. This came out of one of those meetings where we’re trying to wordsmith what it is we do and want to do and want to represent. After about an hour and a half of discussion, one guy stood up and said, “You know? We want to deliver the right feed at the right time to the right place. That’s kind of all the things we’ve been saying.” Everybody kind of stopped what they were doing and turned around and looked at him. That’s why that sign is on the wall. That kind of captured it.
Mike: Yes. Simple, right?
Scot: Yeah. For a while simple really served us well. We’ve kind of moved from that to some other things now, but that’s what a great example of someone distilling the task at hand into something just very simple to communicate.
Mike: Yeah. That’s something that a leader does, as you mentioned earlier. The trust, flexibility, creativity, humility, and that transparent communication. That simple thing we just talked about is fairly simple, but it’s really kind of challenging not only to distill it but is the execution easy?
Scot: Yeah, no. It’s called a performance, right. At the end of the day, it’s easy to say and hard to live up to. If we don’t live up to it, we’re going to suffer. So it’s a simple challenge. That’s well understood.
Mike: Yep. Simple but not easy, right?
Scot: Exactly. There you go.
Mike: A bit like winning the Super Bowl or World Series. All you’ve got to do is keep winning, right?
Scot: Yeah. All you’ve got to do is beat the other teams.
Mike: Yeah, that’s right. There’s a lot that goes into it each and every day and minute.
Scot: Boy I’ll say.
Mike: Yeah. So, well fantastic. Well I’ve also had the opportunity to visit with your team in Elkhorn, and I know you’ve opened a new office now in Omaha.
Scot: We did.
Mike: Yeah, recently. So congratulations on that. I really enjoy spending time with your team. Very professional and exhibit a lot of the key traits and characteristics you mentioned earlier with trust, humility, flexibility, and creativity. So appreciate that.
Scot: Yeah, thanks. Thanks for saying so.
Mike: So what do you feel is next for JD Heiskell?
Scot: Oh boy. This is where I struggle. I have the cloudiest crystal ball ever. I never think of myself as a visionary. I’m endlessly grateful for the people we have here that see the future so much better than I do. That said, we’re consolidators inside our range of competencies. We’re starting to see a growing number of opportunities present themselves, especially through these past few months. We expect to see more opportunities as the changes brought by the pandemic kind of create fatigue and doubt in some of the companies that serve the same markets we do. So I guess nearby we expect to or want to continue to be a consolidator in the markets we serve. We always have out net in the water for those kinds of opportunities. Then we try to keep a little bit of a war chest so we can take advantage of them. I found it interesting that as we’ve grown, we get to see more of those kinds of things for sale and more of the things that are changing hands. We don’t always enter the fray for those assets, but not missing the opportunities for lack of knowledge of them has been important. We try to stay close to our core. Like Warren Buffet says, if we have a strength it’s knowing we’re operating within our circle of competence and when we’re approaching the perimeter. So we’ve breached the perimeter a few times and we’ve rarely enjoyed the results. So we try to stick to our knitting. We’re a blocking and tackling business. There’s a lot of opportunity coming our way now inside that framework. So we’re primed and ready to see how much of it we can capture.
On a whole different platform, I’d like to see us up our cultural game in ways that matter. It’s more important than ever for companies and their leaders to pay attention to social issues. We tend to be focused on our business, and we need to be part of the leadership charge of the social issues that are a lot more visible than they have been in the past. We need to do everything we can to make our business more environmentally responsible and sustainable. We need to look at ways to make diversity and inclusion part of who we are. We talked about our committees. I think we need to make sure that our stewardship reaches the areas of greatest need. I’d like to see us push our giving out to those people who are serving in the margins of society where it can do the most good. We can be better. I think there’s a call out there now for companies and people to be better. I’d like to see us do that.
Mike: Well that’s certainly a noble aspiration Scot. I really appreciate you sharing that with us. As we get ready to conclude here, Scot, any final thoughts or advice or tips you’d give to aspiring leaders?
Scot: You know, this is a tip I got, I guess. Butch Fischer who was the CEO we hired in the year 2000. He used to say people do business with people. I’ve heard that and you’ve heard that, but it’s so true. I think that’s what business boils down to. It’s important to me to be someone you’d want to do business with. I think I’m aimed at being that person. If we’re aimed at being that company, I’m on the right track, we’re on the right track to doing the right thing most of the time. We’ve said this several times in our conversation today. People, they’re our business. We’re a people-based business both on the employee side and the customer side. We try to honor that. We have an 1886 society. That’s the year of our founding. So when people achieve inside our business, they become members of the 1886 society. Over 135, that’s only 15 of those. So it’s somewhat exclusive, but it champions the people that have made a difference for our business. We have an alumni association called 86’d for people who have left the business and retired. They meet for lunch every once in a while, and talk about the good old days, and also do some good things in the community. So people do business with people. You can never downplay the power of people in your business. You can never underestimate it, I guess.
Mike: People certainly make it happen, don’t they?
Scot: They do.
Mike: Yep. People make it happen. Yep. Well Scot, I very much thank you for joining us today. I thank you for what you’ve made happen in not only your business but also your contributions to organizations like NGFA—National Grain and Feed Association—and Future Farmers of America and elsewhere. So I really appreciate your time today and wish you the best on future opportunities and look forward to continuing a great relationship with the team members we deal with from your company here at Greenstone. So thanks again. Oop, go ahead.
Scot: No, I was just going to thank you for this delightful. It’s great chatting with you. I hope next time you’re out in Tulare you will stop in and visit, and we can have more conversations. This has been very enjoyable.
Mike: Well likewise. I will certainly do that. I would love to get back out there and see the national parks to the east of you. There are national treasures out there.
Scot: Yeah and only recently visible because there’s been a lot of smoke up there. But the air is clearing and it’s time for a visit.
Mike: Yes, that’s right. Well Scot Hillman, thank you again. Thanks for joining Outstanding in the Field.
Scot: Yeah Mike. Thanks so much for the conversation. Will look forward to having more of those.
Mike: Okay great. Take care now.
Scot: You too.