Wake-up Call | Kevin Koch: The pathfinding mastermind of business
On the eve of turning 60, Kevin Koch decided to try something new — by running 50 miles in a trail race and hiking the Grand Canyon rim to rim and back again. Koch says, smiling, “And then I climbed Mount Kilimanjaro. And then I went to Arizona and completed an Ironman Triathlon.” He shrugs. “I don’t want to feel old.”
Koch has been going for broke his entire life. The son of an economics professor, he was born in 1957 in Chicago, Illinois and studied at St. Edward’s University before working as a tax accountant for various firms. He eventually landed a role consulting for the McLane Company, a wholesale distributor of groceries and goods founded in 1894, where he made a daring move during a meeting with the company’s CEO early in his career. “The first thing the CEO said [to me] was how proud he was the IRS had never proposed a change to their filings,” Koch recalls. “I said, ‘That means you’re paying too much in taxes.’”
He had a knack for the intricacies of taxes, and eventually struck out on his own, working for national corporations on contingency fees, keeping a percentage of the money he saved them in taxes. When McLane offered him a full-time position, Koch initially rejected the idea. “I had just received a USD 157,000 contingency fee refund check, and that was 1989 money,” he explains. McLane’s CEO countered with more money and equity — and Koch has been with them ever since.
Now working as Senior Vice President of Accounting, Tax and Finance, Koch keeps a close eye on the bottom line. “With online competitors, competition is tougher than it’s ever been in this industry. We realized we needed to innovate at a faster speed to save money,” Koch says, referring to work he’s doing to engineer new business-to-business models, harness data and maximize existing assets. Today, McLane is even putting billboards on the sides of their trucks, to push forward into the 21st century. “More and more, we need a better way to think out of the box,” Koch says.
This interview has been shortened and edited for clarity.
The legacy of McLane is extraordinary. It was founded almost 125 years ago. How does a company like this thrive in the 21st century?
We’re finding ways to increase sales to our existing customers and reduce the cost of those sales. If I can tweak one of those numbers just a little, it can make a huge impact to our bottom line. Recently, changes to our industry have been a wake-up call. We buy stuff, move it around and deliver it. The margins in this business are very small and I oversee our finances. Now, we’re owned by Berkshire Hathaway, grossing over USD 50 billion a year, with 80 distribution centers and over 20,000 employees across the US.
How, exactly, do innovations improve the bottom line?
We don’t try to win new contracts by the dollar. We try to win them by the penny. We sell everything from water to candy to convenience. Our customers expect us to innovate, to come up with more cost-effective ways of doing business. So we come up with ideas and then work with IBM to roll them out with speed. Technology helps us to see things more quickly and make better decisions. For instance, one thing we are working on is advertising on our trucks. We have this great fleet serving the entire US — so how do we better utilize this asset? We came up with advertising. But then we had to figure out how to show its value to our advertising customers.
Measuring eyeballs on trucks on highways sounds like a daunting task. How did you unlock it?
We worked with IBM to put satellite trackers on our trailers, getting pings from cell phones within 100-meter circumferences to be able to know how many people would pass by our billboards. We got numbers from different stretches of highway and dumped them into algorithms, demographically rating each of our routes. Then we could go to advertisers and say this route in New York or California or Texas is going to be worth X number of views, and make the sale. IBM crunched the numbers. They’re also helping us figure out business-to-business models on shipping. They’re a smart bunch of people.
You’ve pushed the limits on many of your birthdays. Any plans in the works yet for your 70th?
I’ve completed eight Ironman Triathlons, studied Tae Kwon Do and done ultramarathons. I run about 150 miles a month and bike 6,000 miles a year. I don’t know what I’m doing at 70. We’ll see what my wife says.