Introduction
Welcome to the value Creators Podcast, the exclusive Insider PodCast for the Klassen group. This is where we talk about how we create value, how we work lead and grow together and real stories from across the Klassen tree. I'm your host, Travis Klassen, whether you're in a machine at a desk or on the move, we're glad to have you on the Klassen crew.

Travis Klassen 0:30
So today we're talking about mission, the why we exist, and this whole idea of value creation, and where did the idea of value creation come from? Is that something you came up with? Or where did we first hear about this?

John-Mark 0:48
Yeah, no. So the first I came across while I was at university, in business school, and we were studying kind of the great companies that have come before us. And a common thread throughout all of these organizations was this focus on value creation and these the value creation had these three different sort of aspects. It started with the customer, and then had the employee, and then it also had the shareholder. And these things had, you had to have them all in interplay. You couldn't just focus on one, because the two other components would be diminished. And so yeah, that's where it came from. And as we've subsequently studied more businesses, we have discovered that this is a common theme in all the businesses we really like and admire and want to emulate. So yeah, that's where it came from.

Travis Klassen 1:43
Okay, so you've learned how value is created through various businesses. The top businesses, I suppose, are the ones that you studied. You mentioned the shareholders, the employees and the customers. And then I noticed in our own value creation guide. You've added vendors as well. There's sort of four groups this value creation guide that I'm holding in my hand. Where did this come from?

John-Mark 2:13
Yeah, again. So this was, this was an idea how when it's when it's a few people in an office trying to solve a problem. It's easy to have ideas bounce back and forth. And as you scale a business, suddenly you have more people in the team expands. How do you how do you get more people to interplay and engage with ideas? So we had this idea of getting this kind of let, how do we create a guide to value creation, and so when you're onboarded, or when you when you change a position, you can kind of review and get this knowledge that we're trying to share across all the entire company, the 200 people today and 500 people ideally in the future. This is more scalable than just talking about it over and over again with everybody. It's just that doesn't work. Okay?

Travis Klassen 3:05
So this is the sort of the next generation move of values on a boardroom wall. We're now putting it into practice. There's a guide. I mean, I saw these little pocket sized guides tucked in with all of the tooks we gave away at Christmas. Yeah,

John-Mark 3:19
exactly. And it's multi pronged, right? This is just one. The podcast we're getting, launching here today is another prong. So we're trying to just move ideas through the organization, get them into people's head, get feedback on them, etc, right? Get people engaged with these, these concepts.

Travis Klassen 3:37
I mean, that's a good you just brought up this podcast we're starting today, which is, episode one of, who knows how many we are recording out here in the New West office, looking over the Fraser River. And I, I've been on many a teams call John Mark where, you know, I'm possibly in Mexico, watching the group, and you're sitting here looking over the Fraser River, often deep in thought, gazing out past the conversation of the issues of the day. Tell me more about what it's like to sit here in this in this space, one of the Klassen spaces.

John-Mark 4:11
Yeah, this is a great space. This is a great thinking space. We have a small office on the on the Fraser River here in New Westminster. We're on, yeah, there's, I've seen sturgeon fish. There's eagles that roost in the trees. Some of the employees go fishing from from the parking lot here, and anything. Yeah, we've got some things. We've eaten it. It wasn't that good for eating, but we tried it. It was great. But so we, yeah, it's a great spot, staring over the water. Generally, I think we've done this throughout history as a human society. It brings a lot of peace and and tranquility, and it's good for thinking and trying to solve problems. So it's a great spot to hang our hats from time to time.

Travis Klassen 4:55
same river is the the river that's transported 1000s, probably hundreds. 1000s of units of wood chips and hog field from up in Mission Ruskin, where my dad, REG and his brothers Dennis MERV, all would have participated in hauling and loading and servicing mills. Yeah.

John-Mark 5:13
And how many? Probably about 60 trailers go on to one of those barges?

Travis Klassen 5:17
Something like that. Even more, there's up to 1000 units on a barge. We used to have a barge loading facility as well, on the freezer. So that's, right, that's so cool. Yeah, right, yeah. So there's, there's a long history, 50 years of history there, hauling material and so like, but we're talking about times when there was 12 people, yeah, and the values, the way that we do business. And as the course of this podcast goes, we're going to talk more about our code and our our four pillars of value creation and all of that. But you know, back then there's, there's a small family and a few employees, and it's quite

John-Mark 5:54
Grandma in the office running the show, and everyone else was working, yeah, yeah.

Travis Klassen 5:57
And it was easy to convey, almost by osmosis. How we do what we do now we're moving that to the next level. Yeah. So, so we're talking to hopefully 200 people, like you said, maybe 500 in the future. What does value creation mean to somebody who drives a truck or fixes trucks in the in the in the mechanic shop, or, you know, packages shavings, like the bulk of our people aren't business people. You just said these concepts came to you from business school. How does this become reality? Yeah,

John-Mark 6:27
we're and this is, this is the pursuit. We're not we're just beginning this. We're trying to make simple concepts to kind of, we're trying to make this a simple concept so everybody can get it and

Travis Klassen 6:40
right from our value creation guide we've written, you know, Klassen exists to create value for customers, employees, vendors and shareholders. So I understand, I mean, I guess I understand how we create value for shareholders. What maybe start there, though, what does it mean to create value for shareholders? Yeah, value

John-Mark 6:58
for shareholders is an easy one. Over time you're trying to grow the per unit value above the cost of of your capital to do that, and so over time that that comes through rates of return, you kind of have row of calculations. But in essence, you want your value to grow over the long arc of time that that is what shareholder growth

Travis Klassen 7:21
means. Okay, so that's the standard. Just think about a bit of business, yeah, like a stock, like,

John-Mark 7:26
think about a stock, you want it to grow if you just stays the same or declines, those are bad. You want it just to be growing over time, right?

Travis Klassen 7:33
Okay, so I get that. But what about the rest? How do we create value for a vendor? Yeah,

John-Mark 7:39
and a vendor, a vendor that we're in a unique business where we service sawmills, right? We have to tend to their bins. If their bins plug up, they are not able to, or they have to shut down, and that's bad, right? Or they dump it on the ground and they make a big mess. And so we have to service these sawmills, and we want to be in a place where we can service them so well that they don't even have to think think about it anymore, right? That's, that's, that's what we want. That's what we mean. Care for vendors that

Travis Klassen 8:06
now becomes a value to them. It's what previously was thought of as just a waste. Problem is now value creating,

John-Mark 8:13
and we can pay more than anybody else generally, because we have, we demand a high price in the market for the products. We can turn around and share some of that with the vendor,

Travis Klassen 8:23
so we can pay more, but we can also service them better,

John-Mark 8:27
exactly, okay, that's like, that's care. And then they don't want to go anywhere else, right?

Travis Klassen 8:32
I get it. I get it. So, so then the same, same question, how do how do we, how do we create value for our people?

John-Mark 8:39
Yeah, so there's this is a multi pronged we want. We want a place where people can grow and thrive. We want to be a place where people can be excited to be a part of it. They want their friends to join. We want a place that pays top of market. So we do this through sharing the spoils with everybody. That's K bucks. We share 10% of all that we make with the with the team. That's really great. Yeah. And we want a safe environment, right? We don't want it all. This is for not if someone gets injured at work, and so it just Yeah. We want to, we want a great place where people generally excited. It's sometimes it's hard work, but sometimes hard work is also really rewarding. Yeah,

Travis Klassen 9:29
so I mean, a lot of the terms that you're talking about sharing the spoils that comes from our four Ps, some of this other stuff comes from our code. There's, you know, as we go over this in future episodes. You know, we'll talk more in depth about a lot of these concepts, but in the meantime, people can pick up a value creation guide from the office or wherever they are and learn a lot more about what we're talking about. But the final group here, and probably not the not to be least, but not last, last, but not least, the customers creating value. Value for customers or delighting customers really that if we don't do that, we have nothing totally, totally and if

John-Mark 10:07
it's a customer down in Texas or a customer in Abbotsford or a customer in Penticton, delighting them is not just a transaction. It's how it's how dispatch and sales communicates them, communicates with them. It's, how are the invoices accurate? Are we on time when they wanted us to drop off the product? All of this is how we can delight the customers. And it's an idea that we want everyone at the company, at Klassen, to think about, how do we continue to delight the customers here. How can we do it better, right? How can we deliver this product, this high quality product, to the customer when they want it? That's what we really want everyone to think about and try to try to improve it whenever we can, right?

Travis Klassen 10:56
So we also have this internal way of talking about it where we've actually said, create value or die, which I we've talked about this many times. And you know, for me, individually, I've experienced that as quite a jarring statement. In fact, I think we've kind of refrained from putting this on T shirts or the size of our tracks or on letterhead or anything like that, but internally, we talk about this. What does that mean? Yeah,

John-Mark 11:20
create value or die. I did not come up with this. Someone else coined it in our in a wandering conversation. But the idea is, if we're not creating value, if we're not doing these things we've talked about, we will die. And sometimes, and dying isn't necessarily going bankrupt tomorrow. Death is actually just sometimes maintaining the status quo. And if you do that for too long, someone will come along and eat your lunch, and we just don't want to live. We get one precious life to live. And so I think having this value creation mode of being is just is the far superior way to be, right? Yeah, it is jarring, for a reason. It's supposed to be memorable, but that's the idea, and I think we will put it on shirts and on trucks over time, as we try to encourage and retain the people that live out these values that we're talking about.

Travis Klassen 12:14
I like that now I'm just gonna kind of dig in a little bit more on like we're gonna put on shirts and trucks. There's a confidence there that you're kind of carrying out. Where does that come from? I

John-Mark 12:25
think studying businesses and thinking about it long and hard, I think you see that if you don't do this, we will die. And like all the best companies that had even, even on a people basis, people can you want to be part of a company. We have a lot of great people, and we want everyone to be able to grow and develop themselves and move into bigger roles, take on more responsibility. If we're not growing, if we're not going after it, we just, we will die and and just we, I don't want to be a part of a company that's not going after it and creating as much value as possible.

Travis Klassen 13:01
So there's create value or die, or there's if you do create value, live and yeah, you

John-Mark 13:07
thrive, right? Value creation is like about thriving, living the world. And there's a lot of I think it's the confidence that the world is filled with opportunities, and we feel that we do that will opportunities will continue to come in our direction.

Travis Klassen 13:22
Wow. Well said. Is there a story that comes to mind if you think about value creation or the act of value creation, whether it's customers, employees, vendors or shareholders, like any of those groups, what story comes to mind as a prominent value creation story at Klassen in the last few years.

John-Mark 13:41
You know, there's so many. A wild

example is we do all this work. We move product around, we service sawmills. Specifically say Gorman brothers lumber. People empty the bins. We do it all around the clock. We deliver it to a bagging facility in merit BC, and they package and process it. They put into little bags, they pack it on, onto pallets, they wrap it, they load it into trucks. We coordinate the logistics to ship this product back down to Texas so piglets can be raised and grown and ultimately win these, these shows in in in that part of the world, and people love the product and love their animals to be raised on this animal bedding, and they're passionate, and if I could say fanatical about it, and just that value chain, you think about how much effort we put into it, and it goes around, and it's shuffled, and it moves through so many different from one, it moves from one person to the next to the next. And this huge value chain. And the customers delighted down in southern Texas, let's say, and it's just, it's a wonderful thing. And yeah, some of the livestock has won lots of awards, as you've seen right on on our betting. And that's just a great,

a great representation of what value creation does.

Travis Klassen 15:19
And that value chain itself. I can just imagine it's every single stakeholder has touched that piece, and in some cases, multiple times where it came from a vendor as a waste product, whom we've partnered with to take that product, and now you've got truck drivers, people who fix the trucks, people who package the shavings, who loaded the shavings, the logistics people, of the account you talked about invoicing correctly? There's, there's over right now, 200 people that are involved Exactly? Yeah,

John-Mark 15:48
it's an amazing thing, and we're all playing a part of it, right? And that's, it's just so cool to be part of a team, to all work together to build something great.

Conclusion
That's it for this episode of the value Creators Podcast. If this is your first time tuning in, make sure to check out previous episodes. Each one offers a unique look at how we create value together, one conversation at a time. On behalf of the support team. I'm Travis Klassen, thanks for listening. We'll talk soon. You.