106 Years Of Family Leadership: Living By Purpose And .

Raytheon Lectureship in Business Ethics at Bentley University106 Years of Family Leadership:Living by Purpose and Valuesfor Four GenerationsPaul MarvinPresident and CEO, The Marvin CompaniesMarch 26, 2018Good afternoon. It is wonderful to be here. Thank you to Bentley Universityand the W. Michael Hoffman Center for Business Ethics for having me,and to the Raytheon Company for their support of this important event. Itis a true honor to be asked to be here with all of you today.I’m used to talking to groups of customersor employees — it is something I really enjoydoing. However, today is a real treat; this is acompletely different audience for me. I amhere today not to talk about products orservices, or our five-year strategic growthplan, or even what The Marvin Companiesdo. Rather, I am here to talk about the reasonwhy we do what we do — and the way we goabout it.We truly believe that we have a higherpurpose at The Marvin Companies. It is notprofits, and it is not shareholder return. Itnever has been. For Marvin, profits havealways been simply a means to a greaterpurpose. It is, therefore, my distinct honorand privilege today to share Marvin’s storyof leading with purpose and values.It’s important to note right off the bat that6 Raytheon Lectureship in Business Ethicsthis story is actually over a century in themaking. It is truly a collective story of fourgenerations of family, our collective team ofemployees through the years, a small townof just over 1,700 people in Minnesota, andmillions of customers around the world. Iam here today simply as the storyteller. Inalmost every way possible, I’m telling thestory created by those before me.Now, my generation — the fourthgeneration of the Marvin family — is nowpart of that story, and the fifth generation isalready becoming a part of it as well. Today, Ilook forward to sharing the past, present,and future of The Marvin Companies. Mostimportantly, along the way, I will share thecommon threads that make us who we are,and frankly, why we are successful.Those common threads are the values and

While The Marvin Companies has constantly sought to evolve, since its founding, another constant has been thecentrality of lumber to its work.purpose that have been our North Star sinceday one. Through good times and bad, thatNorth Star has guided and bonded ourfamily and our extended family of ouremployees, our communities, and ourcustomers.More than 100 years ago, my greatgrandfather, George Marvin, stepped off theCanadian National Railroad train in a tinyMinnesota town called Warroad and decidedto make it his home. Warroad is just sixmiles south of the Canadian border, and itwas there that George operated alumberyard and a grain elevator calledMarvin Lumber and Cedar Co.At Marvin Lumber and Cedar Co., Georgefocused on selling quality products andservicing the customer. He worked hard todo the right thing. Community wasimportant to him — he was very engaged incommunity activities. He believed in givingback. He gave generously to those in need.By the time the depression hit in the1930s, he employed eight people and he keptall eight on the payroll. Not a singleemployee was laid off. During that time, healso extended credit to customers andaccepted bartered items as a form ofpayment. Our company historian hasdocumented dozens and dozens of storiesabout George very quietly handing someonean envelope with enough cash to get by andtelling them to pay it back when they could.He knew that it was the right thing to do. Heknew when an employee or the communityneeded help, and he just did the right thing.These seemingly small actions — actionsthat now live only in black and white photosand passed-down stories — these actionswere anything but small. Great GrandpaGeorge absolutely set the standard for futuregenerations. He stayed true to his values ofproviding meaningful employment andcontributing to the community. He served106 Years of Family Leadership 7

The Marvin Companies have grown to have over 5,600 employees working in facilities across the United States.his customers well.The foundation was laid for why we dowhat we do — our purpose as a company. Itis still in place today. The official purposestatement of The Marvin Companies todayis, “To enrich the spaces and places where welive and work.” We can clearly trace the spiritof that purpose back to Great GrandpaGeorge Marvin and the model he set for usto follow.We associate Generation 2 with mygrandfather William S. “Bill” Marvin. Hejoined the company in August 1939, and thatwas when we started making windows. Billwas the rare visionary that could not justsee a future others couldn’t, he could alsobuild trust and connect with all people. Hecould rally and inspire anyone to make thatfuture vision come to life — and he did.Late in his career, Grandpa Bill was namedby Builder Magazine as one of the 100 mostinfluential Americans of the 20th century. Iremember that he landed right next toHenry Ford on the list.Windows and doors were what Grandpadid, but why he did it was the important8 Raytheon Lectureship in Business Ethicspart. He led a window and door company forhis employees and for his community. It wasa way to ensure that there were jobs in histiny community on the Canadian border.Jobs for his four brothers and many friendsand neighbors serving in World War II.Providing employment for the veteranswhen they returned home from the war wasa priority — and not just any jobs, but goodjobs. Good jobs that provided fair wages for agood day’s work — secure, rewarding workwith opportunity, and most importantly,meaningful work.With the introduction of the windowbusiness, I am proud to say that mygrandfather’s vision was realized, and itbecame our mission. Today, we have morethan 5,600 employees in 12 manufacturingplants across the country. However, ourcorporate headquarters remain in Warroad,Minnesota, the same tiny town whereGeorge landed when he stepped off thattrain at the turn of the century.Today, 2,400 employees work in ourWarroad location, even as the population ofWarroad has yet to break 1,800. The Marvin

Companies has four consumer-facingbrands: Our flagship brand, Marvin Windowsand Doors Integrity Windows and Doors Infinity Windows and Doors TruStile Interior Doors.In addition to these brands, we ownvertically integrated wood, fiberglass, andcomposite manufacturing businesses, and ahandful of distribution and retail businesses,as well as the Marvin Home Center in ourlittle hometown of Warroad. We are thefourth-largest window and doormanufacturer in North America and arewidely recognized as the market leader inthe mid-luxury window and door market.The Marvin Companies set the standardfor innovation, quality, design, andperformance. We have chosen not tomanufacture a low-end vinyl window, anddespite many overtures, you will not find ourproducts in the “big box” stores. We chooseto distribute Marvin products through anetwork of independent dealers — most ofthem private or family businessesthemselves. These dealers become keypartners and extensions of our brands andcompany.Like many of them, we remain 100 percentfamily owned and led. In fact, The MarvinCompanies is the last manufacturer in ourindustry to remain private, independent, andfamily owned.As a family owned and led business, Iwork with 10 of my siblings and cousins whoare also employed in the business asfull-time employees. In addition, threethird-generation family members recentlyretired, and continue to serve on The MarvinCompanies Board of Directors. In August2017, I became the fourth CEO in thecompany’s 106-year history and the first CEOfrom the fourth generation.And yes, I still live in Warroad, with mywife Maureen and our six children. Yes, youheard correctly — we have six children. Did Imention that we live six miles from Canada?The winters are long and cold in Warroad!An important part of a family business issuccession planning — and Maureen and IMembers of the fifth generation of the Marvin family are starting to join the company and keep it moving forward.106 Years of Family Leadership 9

have done our part to increase the odds.Joking aside, the fifth generation nownumbers into the thirties — with the oldestbeing 20-years-old and a summer intern— and likely a few more still to be born. TheMarvin family has already begun planning topass the business — and our values — on tothe fifth generation.Transitioning to the fourth generation offamily leadership makes us part of the slim3 percent of family companies that make itto the fourth generation of ownership.Among these, the vast majority of thecompanies that do make it to the fourthgeneration have less than 1,000 employees.We know it doesn’t happen by accident. Itdoesn’t even happen because of shrewdbusiness sense and acumen, although thosedo help. It happens when you know whatmatters most — your employees, yourcommunity, and your customers — and youcommit wholeheartedly to serving them not only in the good times but also duringthe tough times — especially during thetough times.One of those tough times came for TheMarvin Companies in June 1961. That waswhen the window factory in Warroad burnedto the ground. In a matter of hours, theentire factory was reduced to rubble andashes. Everything was gone in an instant.Presumably, the 170 employees of thecompany at the time assumed a similar fatefor their employment future — careers alsopotentially gone in an instant.There were numerous, generous offersfrom cities across the country suggesting werebuild the plant in a more accessible, morepopulated area. It would have been easier,and certainly more financially attractive, toWhen faced with adversity, such as when the factory burned to the grown in 1961, Marvin stayed true to its values.10 Raytheon Lectureship in Business Ethics

rebuild somewhere else. However, with aneye on our North Star, that wasn’t even aquestion. The community needed TheMarvin Companies, and our purpose to servethe community was far greater than thepromise of a free factory, free land, andno-interest lending that came from othercities.My grandfather Bill and his brothersdefiantly said “no” to relocating. In fact, mygreat-uncle Randolph “Tut” Marvin famouslysaid, “By God, I’m staying in this town if Ihave to dig ditches.” Bill said, “We’ll rebuild,and we will do it bigger and better.” Andthat’s what they did.Within 18 months, all employees had theirjobs back. The business prospered, and sodid the Warroad community. The businesswas positioned better than ever to deliver onits purpose to serve others. Best of all, ayoung third generation, including myparents, was there to watch the leadershipand decision making of the secondgeneration. You can be sure that theylearned from that example.Although we now have factories all overthe United States and our products are soldall over the world, our humble, remotelocation has always played a central role inour story. Its remoteness has provided whatmost would call “challenges,” but we viewthem as opportunities — and even asstrengths. Commercial fishermen andfarmers were some of our first employees.With them came an innovative, independentspirit, a strong work ethic, a “can do”attitude, a fierce sense of loyalty, and thehighest integrity. Our remote location hasfostered the innovation that is a criticallypowerful piece of our company’s culture.I can share countless examples of howMarvin has changed the industry from themost unlikely of places. We were the first toship our products ourselves on our own fleetof trucks. The first to use Low-E coating onour entire product line. The first to makewindows to order instead of stocking“standard” sizes. Marvin invented thefiberglass window category. The list goes onand on. What all of these innovations havein common is that they came from listeningto our customers.I’d like to share an amazing industry-firstthat is a direct result of our values. By 1980,window technology had made strides;however, a window was pretty basic.Windows were rectangular and charged withkeeping out the elements. In 1979, acustomer called Marvin Windows and Doorslooking for a round top window — an archedwindow — for his home in Kansas. Myfather, Frank Marvin, took the call. Up to thatpoint, no major window manufacturer madearched windows. Arched windows werecreated in small, mom-and-pop typewindow shops. However, my father — alwaysthe salesman of the third generation — said,“Sure, we can do it.” He heard a customerListening to customers has driven innovation.106 Years of Family Leadership 11

need and naturally wanted to help.He then found a man in Warroad whomade wooden boats, a craft that requiredbending and curving wood. That man, PeteFrolander, built the first round top windowfor Marvin Windows and Doors, and in theprocess, we changed the fenestrationindustry. Today, every window and doormanufacturer offers a round top windowoption. The Marvin Companies is the reasonthey do.My point is this: our family and company— resourceful, resilient, and focused onserving the customer — listened. We listenedand did what we do best. We responded,took care of the customer, and we changedarchitecture in the United States. Values anda purpose statement might look good on apiece of paper, but they’re worthless unlessyou bring them to life — unless you livethem.Serving the customer is fundamental toliving our values at The Marvin Companies.I’m not inventing a new business theory. Iknow the concept of serving your customeris not rocket science, but it’s amazing howmany companies twist what it means totruly serve the customer. My grandpa Billalways told us, “If your customer does well,you’ll do well.” He really believed it.Understand your customer, serve themreally well, and you’ll never want for a profit.Guess what? He was right. You simplycan’t win if your customers aren’t winning.Serving a customer means providing asuperior, high-quality product, service, andexperience. It means when you fall short ofproviding that superior experience, you haveto stand behind it — and you have to fix it.That includes standing behind yourcustomers when it hurts — especially when ithurts.The wood and lumber used in mostmillwork, including windows, is treated witha wood preservative to help it resist rottingand withstand the elements. In the 1980s,12 Raytheon Lectureship in Business Ethicsour wood preservative supplier came upwith a new formula that they promised wasbetter. They said it would perform better andprotect better — and they even had a testresult to prove it. With reasonable proof ofthe effectiveness of the new preservative —and more importantly, with the trust andpartnership we had and still have with all ofour suppliers — we allowed the switch to thenew formula.Well, you can guess where this is going.The new formula didn’t work. In fact, thenew preservative did just the opposite. Itproceeded to actively and prematurely rotour wood windows and doors. It was theworst possible situation: a defect that wasn’tnoticeable upon manufacture and didn’tmanifest for a couple of years. When it did,all hell broke loose.By the early 1990s, we began to realizethat hundreds of thousands of productswere failing. Thousands upon thousands ofhomeowners had paid good money for theirMarvin windows, only to see them rot in justa few years. We also learned that while oursupplier had one test that showed it worked,they had many that showed it did not. Thissupplier is a huge company. (They are stillaround, and I won’t name them, but I canassure you they are not on the list of pastguests of this lecture series!) In short, it wastruly a David versus Goliath scenario.“David” had an unshakeable foundationbuilt on purpose and values. By this time,the third generation of the Marvin familywas running The Marvin Companies, withmy uncle Jake as the chief executive officer.Our family decided to do the right thing — tostand behind the product. Our customersdeserved so much better. It was as simple asthat.We asked our supplier to stand with us.Instead, they pointed to their one-yearwarranty and walked away. However, weheld firm and did the right thing. Weprovided replacement product to our

customers at no charge for many years. Thesheer magnitude of the impact wasoverwhelming, and at one low point, one outof every four windows we produced wasdone at no charge. Moreover, that didn’teven begin to address the field replacementcosts.We spent every dime the company had— more than 100,000,000. We replacedproducts until every penny was gone. It washard. Our reputation was at stake and sowas our business.My siblings, cousins, and I — the fourthgeneration — watched the events unfold asyoung adults much as the third generationwatched the second generation makepurpose-driven decisions after the fire of1961. We were old enough to understandthat my father, uncles, and aunt had to dothe right thing, even as it was unbearablyhard. We were also old enough to learn fromthat example because our values are part ofthe fabric of the company. Some decisionsare crystal clear, even if it means taking thedifficult path.We took our “Goliath” supplier to courtafter they walked away. I remember Jaketelling us they had a floor of lawyers “biggerthan our entire corporate office.” However,we had the truth on our side, and we hadour values. The court eventually awarded usthe largest jury verdict in Minnesota history.Months after, we received the wire transferof over 150 million. We distributed 50million of it right back to our employees atour annual meeting.Marvin employees had endured threeconsecutive years without profit sharing.Aside from a two-year break in the 1960s,this was the only time that happened in our60-year history of sharing profits withemployees. They stood with us, as they tooknew what the right thing to do was. I was30 years old when I watched my uncleannounce to more than 2,000 employeesthat the company would share 50 million. IThe company nearly exhausted its finances to rectifythe problem from a supplier. When settled in court, thecompany made sure its employees were compensatedfor their work to fix the problem.recall seeing grown men crying and hugging.Many received checks equal to or greaterthan their annual earnings.We had done right by our customers, andin the process protected our name and ourbrand. We had done right by our employees,and in the process, we galvanized a cultureand community that would go to war withus when needed . And wars do come alongfrom time to time.In fact, it was too soon that another warcame along. It was the autumn of 2008 whenLehman Brothers crashed and the economyfell apart in the wake of the subprimemortgage crisis. The Great Recession hadarrived. While it was one of the most severerecessions our economy had ever seen, forthe housing industry it was not a recession,it was a full-blown depression. The housing106 Years of Family Leadership 13

The housing market was devastated during the GreatRecession, but The Marvin Companies refused to layoff any employees.market was decimated in a matter ofmonths. Of course, it hurt us all. It hurtbadly. Every business went into survivalmode, and many didn’t make it.While every one of our competitorsshuttered factories and laid off employees,The Marvin Companies took a different view.Our more than 4,000 employees and thecommunities in which they lived weredepending on us now more than ever. Just asthe eight employees of great-grandpa Georgewere when he kept all them on the payrolld

Purpose and Values for Four Generations Paul Marvin President and CEO, The Marvin Companies March 26, 2018 Raytheon Lectureship in Business Ethics W. Michael Hoffman Center for Business Ethics Marvin Windows and Doors, once known as The Marvin Lumber and Cedar Company, in Warroad, MN, back in the early 1900s and today.