From all outward appearances, this company could be just another one of those slick, high-tech ventures in California's Silicon Valley. The suburban headquarters is filled with casually dressed, friendly young people who could pass for yuppies. The president has years to go before turning 40, and the 300 or so office workers attend monthly wine-and-cheese parties.
Actually, Great Plains Software is set next to a shopping mall in the middle of some freshly plowed wheatfields in Fargo, North Dakota, a part of the countrybetter known for sugar beets than for BASIC. The "yuppies" are drawn mostly from local North Dakota and Minnesota colleges, and the parties run more to Miller beer and Swedish meatballs.
In this unlikely locale, Great Plains is harvesting a bumper crop of customers for its line of microcomputer-based accounting programs. One analyst estimates the company's 1989 sales at $22 million, making it the second biggestU.S. producer of sophisticatedPC-based accounting software.
More remarkably, the family that built Great Plains spans epochs in America's economic history. When it took over the tiny company in 1984, the Burgums had had 78 years of experience running the Arthur Farmers Elevator Co., a grain elevator business in nearby Arthur, North Dakota, population 440.
The Burgum family whose forebears came to North Dakota in covered wagons have found a strong bridge between the grain elevator business andcomputer software: customer service. "I'm conducting business the same way that you have to in a small town where everybody knows you," says Doug Burgum, Great Plains's 34-year-old president.
More companies talk about customer service than actually deliver it. In places like Arthur, however, where customers are friends and neighbors, you learn early what those words mean and you'd better deliver if you want to stay in business. For generations, the Burgums have been dealing face to face with the families who own local farm businesses. Now, however, they are serving faceless thousands across the country, with tools like disks and modems.
The Burgums' successful leap into a postindustrial, knowledge-based economy demonstrates that while some things change, basic business values like good customer service remain the same and are, in fact, transferable between the unlikeliest environments.
The person most responsible for beaming the Burgum family into the computer age is Doug Burgum, who left Fargo as a young man. After earning a Stanford MBA, he went to work in the Chicago office of the high-powered McKinsey & Co. management consulting firm. Six years ago, in a move tantamount to convincing a crop duster to pilot the space shuttle, he persuaded his brother, mother, two cousins, and an uncle the board of the Arthur Farmers Elevator Co. to buy a little software venture started in the back room of an Apple computer store in Fargo.
The Apple store had opened on Fargo's main street in 1981. In those covered wagon days of personal computing, not many people knew Apples from oranges, mainly because there was little application software around. Out of desperation, the owners of the Apple store put two programmers to work in a back room to create some. They figured that if there was a way to jumpstart personal computer sales, an accounting system essential to any enterprise was the way to do it.
By 1983 the shop's software venture had a product and enough sales to stand as a separate company, which was named Great Plains Software. It had also gotten big enough to need a vice-president of marketing and sales. That's when Doug Burgum got the call. When asked to join a dinky 20-employee software firm in Fargo, Doug says, "My initial reaction was, 'You've got to be kidding!"' At McKinsey, he dealt with Fortune 500 executives twice his age and lived only blocks away from the yuppie playground of Chicago's Rush Street.
Then again, he wanted to return to North Dakota, and he had always had entrepreneurial leanings. (He'd started a chimney-sweeping business in college.) What's more, at McKinsey, he was starting to see that "no matter how good your work was, you were still just recommending and persuading, rather than deciding and acting."
So he went for it, and a short time later, bought an ownership stake in the fledgling company with his own money, by mortgaging some croplands he had inherited from his father. His $260,000 investment amounted to big money for the company back then. But it still wasn't enough for the growth it was contemplating. In the search for venture capital, the owners began exploring an alternative that would solve their funding problems and enrich them too- selling out.
Burgum opposed the idea; he had not left the big time to work for someone else. And it just so happened that his own family's Arthur Farmers Elevator Co. in his hometown of Arthur had just sold its 50 percent stake in a Fargo-based seed company. The Burgum family wanted to invest the money elsewhere. They had considered buying another elevator, farmland, even buying a bank. But Doug had another proposition for them: buy Great Plains Software.
You would think that the Burgum family would have taken substantial pause before plunking their money down on a business as familiar to them as an air-conditioning venture might be to an Eskimo. But to hear them tell it, they took to the idea with equanimity. After all, says Joe Peltier, a cousin who co-manages the grain elevator company, this wasn't the first time the family had entered unfamiliar territory. For years it had operated the generating company that provided Arthur with electricity. "It wasn't that foreign to try something different," Peltier says.
It didn't seem like such a big gamble, really. As Doug's mother, Katherine, points out, "It looked like less of a risk than reinvesting in agriculture. In the farm business there are so many things you can't control the weather, the government, the bugs."
Thus undaunted, the Burgums, in a transaction that took three weeks from start to close, put $2 million into Great Plains, making it their second family business.
Except for Doug, none of the Burgums has a direct operating role in Great Plains. But as owners and board members, Burgum's mother, brother, two cousins, and an uncle take an active though low-key role in its affairs. That raises the question: What could a family in the grain elevator business possibly have to contribute to running a software venture? Technologically speaking, its members are, well, virtual rubes. But bumpkins, especially at business, they are not.
The Burgums have been running the elevator in Arthur since Doug's grandfather, J.A. Burgum, acquired it in 1906. Today it is in the hands of the family's third and fourth generations. Cousins Joe Peltier, 61, and Rick Burgum, 44, co-manage the Farmers Elevator Company. Doug's brother Brad, 38, is a certified public accountant, attorney, and volunteer ambulance driver in nearby Casselton.
If there is a central figure in the Burgum clan, it is Doug's mother, 75-year-old Katherine Kilbourne Burgum, otherwise known as "K." One of North Dakota's best-connected citizens, she has served on a flock of state and national councils, including the Republican National Committee. Her diminutive size she's under 5 feet belies her influence at Great Plains. She has had a direct hand in recruiting some of its top executives.
Along with other family members, she regularly attends company functions. Employees find it easy to talk to them. "In some companies, it's a nervous situation talking to the owners," says Bob Gifford, the company's senior vice-president of research and applications development. "But K. and the family do not make people nervous."
Of course, it's hard to have too many pretensions when you come from Arthur. Forty miles from Fargo, the tiny town hasn't changed much over the years, although it does now have a "mall," which consists of a bank, the post office, a small lunch counter, and two stores. Commerce in Arthur, however, is still dominated by the grain elevator owned by the Arthur Farmers Elevator Co., which now owns elevators in four other North Dakota towns, and has annual sales of $40 million, nearly twice those of Great Plains's.
In six years, the family has plowed another $2 million into Great Plains. But along with capital, it has given Great Plains some of its own good ole' fiscal conservatism. Joe Peltier says that if he's had any impact, it's been by promoting a succinct philosophy: "Go slow."
Burgum says members of his family seem just like bankers, a familiar role for them. The elevator company often extends credit to farmers. Even if they're baffled by the technology at times, Burgum says, "These guys understand the numbers. They make sure we don't go too far too fast." So far, Great Plains hasn't: Its debt, for example, is almost zero.
The biggest contribution the family has made to Great Plains is emphasis on customer service. "We don't want Great Plains to conduct business any differently than we do," says cousin Rick Burgum. How is that? Well, brother Brad explains, "The elevator business is really a service industry."
In fact, service may be about the only way the Burgums have to differentiate themselves. "There's an elevator in every town," says Rick Burgum. "Everyone sells the same kind of product."
These realities of small-town life make good service critical. In a small town, there is no place to hide. Disappoint one customer and everyone, including family, friends, and neighbors, knows it. Lose just one customer, and you lose one big customer, perhaps for generations to come.
So the Arthur Farmers Elevator Co. lavishes a lot of attention on its customers. Cousins Rick or Joe will shoo themselves out to a farmer's field at the drop of a seed-company cap. One day last spring, Rick abruptly excused himself from a meeting to see a farmer about a new granulized herbicide which was not dissolving in water as promised. Rick hauled a sprayer from the elevator out to the field, in an effort to get the chemical down on the ground properly.
Burgum has imbued Great Plains with this same at-your-service ethic. The family may have moved off the farm, says Doug, but it brought a lot of what it had learned about life and business to Great Plains Software. For one thing, Burgum has given Great Plains a decidedly small-town feel. The lobby contains pictures of its employees, arranged like pages out of a yearbook. On a map in one corridor, colored pins mark each employee's hometown.
To consider the customers' needs first is not a matter ofsentimentality; it makes consummate business sense.Burgum believes that hiscustomers want support morethan anything else, especiallywhen it comes to the smallerbusinesses that typically usePC-based accounting software. For many of them, aproblem with their accounting software could threatentheir ability to survive. Whatwould happen if a small company suddenly finds its receivables in an electronicallyscrambled mess?
For this reason, Great Plains has made a strategic commitment to respond to customer problems fast. "The right answer in this business three days later is the wrong answer," Burgum says. "The right answer is the right answer when the customer needs it, which is now. If your attitude is that customer service is not an expense but an investment if you believe in your heart that it can lead to competitive advantage then it's easy to get enthusiastic about investing in people and systems."
Great Plains's customer service staff consists of 106 people, a third of all its employees. Its technical support specialists, who work by phone for the most part, are not just drones wearing headsets and recording complaints. According to Lori Boldt, the company's 30-year-old vice-president of customer assistance, all of its reps have at least a four-year college degree. Three colleges in the Fargo area alone North Dakota State, Concordia, and Moorhead State keep it supplied with qualified applicants. Last year, the company processed 3,000 applications. Although the company taps people with majors from engineering to English Lit, applicants have to have at least one year of accounting under their belts.
Applicants' academic credentials, however, may be of less concern than their problem-solving, communication, and teambuilding skills. Through five interviews, they are quizzed about their ease with accounting systems, with computers, and, more importantly, about their inherent interest in it all.
"We're looking for somebody who is willing to take a risk and make a decision in favor of the customer," Lori Boldt says. To identify that ability, Great Plains's interviewers pose hypothetical situations. Or, if the applicant has experience in dealing with customers even as a clerk, they will ask a simple question: What is the toughest customer problem you ever faced, and how did you handle it?
Once picked, Great Plains's customer-support specialists are put through a six-week training course. The curriculum is meant to help these new hires learn the software, but that's not all. "We're not trying to teach people answers as much as we're trying to teach them to make decisions," says Boldt. "They should feel good about making decisions; we want them to do what's good for the customer, whatever it takes, without giving away the store." They're also taught telephone techniques, listening skills, even how to read a caller's emotions by noting certain cues, such as pauses that might hint at embarrassment and the need for gentle hand-holding.
To familiarize new hires with the company's culture, they are buddied up with veteran employees, who make sure they are included in such socializing as get-togethers at the proverbial after-work watering hole. This buddy system helps build esprit de corps, which goes a long way toward preventing the high burnout and turnover rates that usually plague such heavy telephoning, customer-relations jobs. Boldt figures less than 5 percent of her staff leaves every year compared with 15 percent or so elsewhere. Much of that difference stems from her own morale-building management style. She sees to it that the department regularly holds theme parties, and spends a lot of time knowing "what's going on in their personal lives."
In a unique compensation structure, customer-service specialists can raise their base salary by as much as 10 percent a year, based on a six-month subjective review and a more objective series of two-hour timed tests one for each Great Plains product. The tests, which they can take when they feel ready, consist of a true-false section on product features and functions, a case study to measure problem-solving aptitudes, and other items. Employees can gain another 5 percent on the basis of their productivity, measured by incoming calls they've taken or thank-you letters they've received. And, finally, they can earn commissions, up to $600 a month, by selling a Great Plains service package.
On the systems side, Great Plains has spent millions on an integrated call-handling system. When customers phone and beep their authorization number, the system identifies them, the computer system they have, and the products they use. Then it routes their calls to an appropriate group of product support specialists. It also allows those specialists to key up a complete six-month history on the customer the problems they've had before and how they were resolved.
Great Plains often goes the extra mile. The company has on occasion sent its specialists far from Fargo at its own expense if that's what it takes to solve a customer's problems. One customer who got hands-on service was the Corman Bag Co., a 20-employee industrial packaging distributor in Chelsea, Massachusetts. After she started using the software last year, Julie Corman wound up facing a multitude of glitches. Among other things, the Great Plains module that generates and tracks purchase orders wasn't meshing with other functions, and Julie, who oversees the books for her family's business, couldn't get the program to enter and record inventory items in the format she wanted. After weeks of trying to straighten it out by telephone, Great Plains dispatched a customer-service rep to Chelsea. The problem was cleared in a day.
The pleasant surprise is that customers are more than willing to pay for this attention. The company offers a series of service packages, ranging in price from $195 to $3,595, which guarantee that any customer inquiry will be answered within an hour. If it isn't, the customer gets a $25 gift certificate. As of mid-May it had fielded 126,000 calls without breaking its promise. So many customers signed up for packages that Boldt's department has become a profit center, accounting for 20 percent of revenues.
Great Plains's reputation for service is beginning to exceed that of its software. Warren Blanding, who heads the Customer Service Institute in Silver Springs, Maryland, places Great Plains in a group of customer service stars that includes L.L. Bean, Abbott Laboratories, and Time-Life Books.
In the process of reviewing accounting packages for InfoWorld, a trade publication, Richard Morochove, a software consultant, went so far as to pose as a customer. He found Great Plains to be "by far the most helpful and friendliest" of the companies he checked. "Aside from their initial helpfulness, they even called back two days later to follow up. At one point," Morochove says, "I wondered if they were slipping something into the water, because everyone seemed so damn cheery."
Although things seem to be going well right now, Great Plains's future is not without its question marks. "If they have an Achilles heel," says Morochove, "it's that they tend to be more conservative than their competitors when it comes to expanding into new markets; they tend to move more slowly in the fast-moving software industry." Competitors question the technical elegance of the company's software. "It hasn't been rated as the easiest software to use," says one.
There's also a question of whether the family can provide enough fuel for the company to keep up its impressive growth. Even though revenues have skyrocketed, financing is tough to come by. It remains to be seen how long a small-town grain elevator company, no matter how successful, can sustain the business without banks, venture capitalists, a corporate sugar daddy, or even Wall Street.
And can a software company based in Fargo really succeed? "Location doesn't have any impact on its ability to market or support a customer," says Mitch Paioff, author of the Accounting Software Guide and a consultant based in San Jose, California. But one competitor wonders if the company can attract the executive talent and depth it will need as it matures.
The biggest question of all has to do with family values. Right now, life is still simple at Great Plains, just as it is in Arthur. What happens as the company gets bigger and more complex, and it gets further removed from the farm?
Will the small-town family values that underlie Great Plains's reputation for customer service become irrelevant? K. Burgum considers the question for a moment. "Never," she concludes. "Caring is always relevant."
Great Plains Software
Product: Accounting software for PCs.
1989 Sales: $22 million.
Ownership: Burgum family owns about 80 percent of the company.
CEO: Douglas Burgum, 34.
Family Involvement: Six members sit on the board.
Major Accomplishment: Family expanded from grain elevator business in North Dakota to successful ownership of a high-technology, knowledge-based company, finding customer service the key to both businesses.
Burgum's guide to customer service