Heritage Parts CEO Discusses Responding to Disruption

CEO John McDonough shared his experience in steering Heritage Parts through disruption during a recent YIL retreat.

By Tim O’Connor
Managing Editor
tim@feda.com

The foodservice equipment market is a mature industry and often slow-moving, says Heritage Parts CEO John McDonough. Despite that history, during the past 10 years, outside money has come into the industry and put pressure on its traditional players by driving changes in technology as well as process.

For established equipment providers, keeping up with that change is a constant challenge, McDonough noted while speaking at a two-day FEDA Young Industry Leaders retreat last November. “If you want to take that business and make sure it has a long-term survival rate in this space, you can’t sit still,” he said. “You have to be agile and react to it.”

One of the keys to ensuring that survival is the wise pivot: the ability to steer an organization through disruption and identify how it must change. During the retreat, McDonough shared Heritage Parts’ own story about how it faced a sudden change in the OEM replacement parts industry and unlocked its trapped value to reposition itself for a stronger future – one that will soon see it merge with its largest competitor, Parts Town.

Heritage’s story of disruption begins in the 2000s when the company was challenged by fellow replacement-parts provider Parts Town, which had developed a strong e-commerce strategy. Instead of trying to replicate what Parts Town was doing, however, Heritage doubled down on the area where it excelled – customer service.

Heritage’s success in adapting to its market mirrored the lessons taught in the book, Pivot to the Future: Discovering Value and Creating Growth in a Disrupted World, which the 16 YIL attendees were asked to read as part of their preparation for the retreat.

“With the book, one of the things that was truly exciting for me, is when we think about leadership in today’s foodservice industry there is a lot of stuff coming at you,” said Erik Koenig, vice president of strategic marketing and product content for Heritage Parts and retreat co-host. “There’s a lot of things we have to think about – from not just a financial and technology look, but even a people perspective.

“So, when we think about leadership in today’s foodservice industry, we almost have to become a little more jack-of-all-trades because there’s a lot of things we have to consider in trying to set our businesses up for today and for tomorrow. Because tomorrow is coming faster and faster as we move through the evolution of what technology is doing to us,” said Koenig.

Koenig shared several keys to responding to disruption, including:

  • Releasing trapped value;
  • Reinvention: continually coming up with better ways to unlock value in the organization;
  • Balancing and rebalancing investments in the old, the now, and the new.

Fortunately, as Koenig pointed out, the FEDA’s YIL members are digital natives who grew up with technology as part of their world – as a result, they’re better prepared to evolve alongside that disruption. He urged participants to think about their operations today and how they fit into three lifecycle stages: the old, the now, and the new. The wise pivot serves to identify and unleash opportunity by helping companies accelerate what they’re doing today to reach the next phase of what they are going to do as an organization, Koenig explained.

Other topics covered during the retreat included the shift in market power from the manufacturers to consumers, and what organizations can do to make business easier for their customers. McDonough also discussed Heritage’s acquisition by Parts Town, which was announced in October.

YIL members reacted positively to the two-day event, with many leaving positive comments about their experiences:

“It was valuable to have time to share struggles with others in the industry who are having the same problem,” one attendee noted.

Another added: “I really felt that our companies are similar and have similar problems and are all trying to improve our businesses to reach more customers. I got a lot of ideas about how we can be a disruptor in the market with the right investments.”

Supporting the next generation of leaders, like the YIL group, is an important mission – and a key reason why Heritage was eager to host the event, says McDonough. “Making sure that we wind up with some really excellent talent coming up through the industry is something that is incredibly important,” he says.

On-Demand Retreat
A video of the FEDA Young Industry Leaders retreat at Heritage Parts, including the presentation of the wise pivot and attendee discussion, will be posted on the FEDA Learn Institute, learn.feda.com .