Tubular Steel

Tubular Steel, a national steel distributor headquartered in St. Louis, was burdened by politicking and infighting. The heads of each operational department only communicated through the CEO; lateral interaction was nearly nonexistent.

Zero Lateral Communication

Larry Heitz, who would later become President and CEO, described the dysfunction: "Jack was a very hands-on person but didn't trust anyone, so he had four, five, or six people who always reported to him, including myself. And he would never really have those people work with each other. He'd have them kind of just working for him, and then he'd go from there to the next person, and so there was not a spirit of cooperation."

The silos in business operation created massive amounts of waste, throttled productivity, and eventually placed at risk the very survival of the organization.

Sales vs. Credit: Years of Conflict

One longstanding conflict occurred between the sales and credit teams. The teams had been at odds for years, each viewing the other as an obstinate barrier to successful performance.

Credit saw the sales team as reckless, fixated only on closing deals without assurance that potential clients could actually afford the agreement. In turn, sales viewed the credit team as overly restrictive, undermining at the last moment deals that had been months in the making. Both teams blamed each other while the company suffered.

Market Collapse at Worst Possible Time

The timing of this widespread dysfunction could hardly be worse, as the global market demand for Tubular's products was in steep decline. The market for their products was shrinking from 10 million tons down to 6 million tons—a 40% collapse.

High-Profile Consultants Declare It "Hopeless"

Despite engaging one of the highest-profile change management consultants in the country, Tubular could not seem to gain any traction. Turnover rates were high, with several of the top performers in the organization leaving in search of less contentious working conditions.

After exhausting their repertoire of solutions with little substantive effect, the management consultancy pronounced Tubular's situation "hopeless."

Larry reflected on this dark period: "During this time, any number of people left the company."

The CEO's ineffectual attempts to turn things around turned to desperation as the company he had founded hemorrhaged talent, profit, and potential. Without a dramatic, fundamental change to reconnect the estranged silos in business, Tubular Steel would fail.

Weekly Training Plus Executive Coaching

Fortunately, the high-profile consulting firm was familiar with Arbinger and referred Tubular to them. "Nothing has been the same since," Larry would later note.

Arbinger began working with Tubular's executive team in weekly training sessions, supplemented by one-on-one sessions with members of the management team. This combination of group training and executive coaching helped company leaders reevaluate their mindsets.

They began to understand their impact on each other, see the toll it was having on the organization, and reorient their work to account for that impact.

Larry described the learning process: "It took a little over a year trying to understand how people fight against each other versus how people work together and what it means to be on one side or the other."

Dismantling Silos Systematically

The silos in business that had become entrenched as normal operating procedure were systemically dismantled.

This organizational integration was facilitated by the reexamination of longstanding conflicts like the sales vs. credit battle. With the help of Arbinger principles and practices, these teams began expanding the scope of their objectives, changing their definition and metrics of success to include the enablement of the other team's goals. 

Full-Time Commitment to Implementation

As the importance of these shifts began to be felt throughout Tubular, Larry Heitz, the executive assistant to the CEO, made a crucial decision.

"I gave up all of my other responsibilities at the company except to work on installing the Arbinger system. And so that became my full-time job," Larry explained.

This commitment to change reverberated widely. Heitz oversaw various aspects of implementation including the company-wide training of staff and the development of new metrics and processes that would enable each employee to measure their impact on the overall company.

Larry described the systematic approach: "Developed how people would figure out what they were supposed to do, not only to make their area successful and to continue to progress, but also how what they did impacted other areas and how they could do things that would help other people be successful or more successful than they would otherwise be."

CEO's Critical Trait

Despite Jack's management struggles, he had one critical strength: "The one thing that was great about Jack is he really wanted this company to be successful, and within reason he would do about whatever it took to achieve that end."

This willingness to invest in real change, even when it meant acknowledging his own shortcomings, made the transformation possible. 

Equipped with an outward mindset, the employees at Tubular Steel transformed the company. Silos in business dissolved as collaboration blossomed between historically divided departments.

Rapid Transformation from Enmity to Goodwill

Less than one week after the credit team reoriented their objectives to include the sales team's success, the sales team was overheard freely praising the same coworkers they previously criticized: "If anyone can figure out how to work with customers to help them qualify, it's our credit team."

This rapid transition from enmity to genuine goodwill and mutual support unleashed potential in Tubular that was previously inaccessible.

Unprecedented Revenue Growth

Larry captured the dramatic business impact: "We grew from about 30 million to over 100 million and more than quadrupled our profit. The market for our products had gone from about 10 million tons down to 6 million tons. So our marketplace in the U.S. was a lot worse, but we still grew by a factor of four."

The company achieved 4x revenue growth while their market collapsed by 40%—a stunning reversal that defied all industry expectations. 

Innovation Through Collaboration

Team members devised new and innovative ways to adjust their work to improve productivity and performance. They rallied together to develop unique approaches that created competitive advantage in a declining market.

Larry described the cultural shift: "Over the course of three or four years that made a tremendous difference to the company and a different kind of a culture."

Industry-Leading ROI

Within two years of implementing Arbinger methods, Tubular was producing the best return on investment in the industry—doubling and even tripling the ROI of their nearest competitors.

To those who might be skeptical regarding the power of shifting organizational mindset, Larry responds: "This is not soft stuff. Bottom line is that Arbinger can help a company make more profit. You get further ahead with a cooperative atmosphere, and you make more money because of it."

Sustained Excellence

Unlike so many training initiatives that amount to nothing more than a flash in the pan, the change Arbinger enabled within Tubular Steel was a fundamental change in mindset, buttressed with new ways of working.

Remarking on the longevity of this change, Larry noted: "The training and infrastructure that was put in place was so deep-rooted that the company has continued to be successful ever since."

From Hopeless to Unprecedented

Larry reflected on the complete transformation: "We were such a basket case that the most effective consulting firm we could find (and it has a very high national profile) could do nothing with us, despite months of trying. Fortunately, this firm was familiar with Arbinger and referred us to them. Nothing has been the same since. We are now the most profitable company in our industry. As a result of Arbinger, we have exceeded goals and created camaraderie to an extent completely unprecedented in my career."

Tubular Steel proved that even situations declared "hopeless" by elite consultants can be turned around when you address the root cause rather than symptoms. When zero lateral communication, years-long departmental warfare, and a CEO who "didn't trust anyone" combined with a 40% market collapse, traditional change management failed completely. But by systematically dismantling silos, reorienting team metrics to include enabling other teams' success, and having one executive dedicate full-time to implementation, Tubular quadrupled revenue to $100M while competitors struggled. Within one week, sales and credit teams transformed from mutual criticism to genuine praise. Within two years, Tubular achieved best-in-industry ROI. The lesson: when high-profile consultants give up, the problem isn't hopeless—it's that you're trying to change behaviors without changing the mindset driving those behaviors. Change the seeing, and "unprecedented" results follow.