- PNC is proud to support "Business Forward," where community leaders discuss the issues confronting business in central Illinois.

(ethereal music) - Welcome to "Business Forward", I'm your host, Matt George.

Joining me tonight, Trench Scholl.

Trent is the president of Ledgestone and Austin Endress the CEO of Ledgestone.

Welcome to the show, Trent and Austin.

This is gonna be a fun one.

Start with you, Trent, are you from this area?

- Yes, I am.

I'm originally from a small town Princeville, just north of here and I currently live out in North Peoria.

- [Matt}Okay.

- So went to college locally at Monmouth college.

- [Matt] Oh, wow.

And so I've been kind of a local my whole life.

- Been a local, how about you?

- Yap was born in Morton and was raised here and went to Illinois State so.

- Illinois State, I mean, if you think about the colleges around here, just kinda off topic, we've got some great ones.

we've got Bradley and then Illinois State.

we were talking recently to Dr. Bailey from Illinois Central College.

There's a lotta happening here in this region.

All right, start with you, Trent.

What is Ledgestone?

- Yeah, so thanks for asking.

(laughs) Ledgestone, we are a data and technology based risk management organization.

And really what that means when you boil it down is, we started in the commercial insurance space and since then have evolved into much more than that.

And so we take a priority of dealing with, we have our own safety company called XOG pro and then that has evolved us into the culture piece of what really drives safety for organizations.

And that is organizational health, leadership, training, executive coaching, et cetera, et cetera.

And so we have specialized in heading down the pathway of trying to provide true value for organizations above and beyond just the risk transfer agreement between what insurance provides for an organization.

- Okay, so you're not an insurance company, you're more.

- Absolutely.

- And so also when you're talking about risk management.

I hear it a lot now.

It used to be just, insurance was just what you thought of as insurance, right?

But the business has changed.

What does risk management even mean in that type of business?

- Yeah, no, it's a great question.

So I think if we think about what risk is, (clears throat) it's the chance of what we'd say is a harmful event or an adverse event that happens, right.

And we have them all over.

Death, you have business interruption, you have a lot of circumstances that could cause financial harm to businesses.

And so when we think organizationally about risk, insurance, right, has been a substitute for most companies.

We don't have access to what we call as risk management measures, techniques, controls.

So we substitute, right.

We substitute to what's available and that's an insurance program.

The problem is when we think about what risk is, right?

And we think about how to sustainably reduce the adverse effects of risk, what it really comes to is mitigating the exposure itself, right, not just reacting to what we have, not just transferring to what it is and taking the status quo.

It's actually thinking dynamically about what it is.

And when we talk about the management of risk, right, or really the proactive control of risk, is can we modify what it is that we have, right.

What the risk that we face every single day and how it can be mitigated before it becomes problematic.

And so when we talk to business owners, right, it's not simply, let's just transfer what we have.

Let's think about what drives it.

Let's think about what creates it and let's think about how we can proactively mitigate it so it does not become problematic.

- I think you used a word reactive.

I think that that's a key word of what you just said, because a lot of times, if you look in the past, insurance is a, reactive, you don't really think of anything bad that's gonna happen.

- Yeah.

- And so when you, it's just interesting how it's evolved into a different mindset, your business, and we're gonna get to that in a second, but Austin, back to you again, you say, one of the things that you do is you focus on applying high-level principles and frameworks to create vision.

I got this straight from your website.

(laughs) Even though I talked to you, - Yeah.

- But the piece here that's important that I wanna talk about is you drive strategy for the whole organization.

What strategy do you have to have an insurance company or a risk management company?

Probably a lot, I'm guessing.

- Yeah, it's a great question.

So when we think about certain risks and we talk about weather risks, right?

Until we have a magic wand that can control mother nature, there's just certain exposures that we're gonna face, right?

If wind or hail or fire happens, right, we'll deal with it.

But what we really focus organizationally is something on what we would say is the human side of risk.

From a business owner's perspective a day, you think of something like work comp insurance, right, - [Matt] Right.

- Work comp is a direct impact of worker injuries, right?

Worker injuries are really what we'd say is based on safety performance.

Trent mentioned that we have a third party safety organization.

And when we went down that road, we took what I'd say a lot of insurance companies think about.

If we put in best practices, if we do training, if we do regulatory compliance, right.

If we look at OSHA and we help drive that we're gonna change safety performance, which is gonna improve work comp, right.

What we found is there's a critical component we were missing and that is the best practices in and of themselves have limitations.

And we found organizations across the spectrum that has similar practices and some had great loss performance, and some had really poor loss performance.

And what you start realizing right, is there's no correlated trend, there's no connection.

That having these things in place, adhering to this standard of best practices, wasn't actually driving performance.

And so at some point, if things aren't correlated or they're not tightly connected, we have to look for what the driver is.

And what we started identifying in the organizations that were showing sustained performance improvement is something called culture.

And really, as we talked to more and more organizations, what we'd say is that critical piece, that it's actually your people and your employees commitment to the organization, combined with the execution of best practices that drive performance.

And so when Trent mentions this idea of organizational health, organization theory, we've really shifted a lot of our focus.

And our true belief is in driving the engagement of your people, you will in turn, improve their commitment, the loyalty, their motivation, which also improves all the different practices you're gonna implement throughout your organization, driving what we'd say, our key performance areas within a business.

- Interesting, so Trent, let's talk, I mean, you brought up culture, let's talk about it.

So how do you, if you're a business and let's say I don't hire your company, and I think I can change culture myself.

How does one evaluate culture?

Number one, but then probably we do it wrong, but then how do you come in with Ledgestone and your team and evaluate culture?

'Cause I think it's probably look two different ways.

- Yeah, so it's interesting that you say that 'cause one of the big focuses that we have right now is we've actually partnered with Purdue University on Cultural Assessment Tool.

But it's not just a Cultural Assessment Tool as you would think of it today, like some organizations have them where they're basically, they're trying to just decipher where your problem areas are.

We're trying to take 17 different dimensions of an organization and trying to find out where those impact, where those drivers are and then to be able to quantify which that's the big mystery.

So we talk about things like culture and Kevin Dill, who is our Chief People Officer.

He talks about it being, it's a very squishy thing.

It's hard to get your hands around, it's hard to grasp sometimes.

And so if we can figure out what some of these key motivators are inside culture, then we can start to actually make differences in those dimensions.

And we can connect those to certain KPIs of organizations, those key performance indicators, where we can start to drive performance in specific areas.

So this assessment tool that we're working on right now will help deliver exactly what you're talking about.

How do we work today?

Today we come in with organizations and we do organizational interviews and we actually come in and do, I hate the word consulting, because it's more than that.

It's more of asking a lot of really interesting questions.

And then we bring our team in and they come in and start driving value inside the organization.

- I hate to use the word audit.

But in a way that's kinda what you're doing.

You're auditing the company and the culture, and 'cause you have to piece everything together.

So for our viewers, you mentioned the indicators and I think that's whether it's 17 or whether it's 50 indicators.

What are examples of a couple of indicators that you would be looking at and or I would be looking at when I'm evaluating, hiring someone like Ledgestone to come in and do this.

- Sure, so some of those indicators would be, (clears throat) like employee engagement.

Some of those would be, are there direct one-on-ones to management or to their direct reports, Some of those indicators may be areas advancement within the company, within the organization, career opportunities.

Some of those may be, just the trust factor of what's going on in their direct report, or maybe trust in leadership.

As a whole, organizations we believe are all a function of leadership.

And leadership is where everything starts and everything ends.

But that leadership gets filtered through the culture of the organization, to the people that are actually doing the work.

And so we talk about something called we want people to be viewed as human beings, not human doings, because the humans are doing the work for them.

- That's good, so Austin, how does AI play into this?

- That's a great question.

So if we think about what artificial intelligence does, right, and really specifically is what we look to apply it in something called machine learning is you're taking data, right?

And you're putting it into this machine and you're analyzing this data and looking for connections, at some point you can start identifying connections.

And one of the ones that we found again is how certain activities of businesses relate to performance, right?

And as we get more and more data, we can fuel our engine with information, right?

That engine itself can start making recommendations.

It can start finding those connections that have high correlations with success, right.

And start evaluating businesses that could benefit from that no different than Amazon, right?

Who understands your tastes and your preferences, right.

Makes product recommendations that they think you're gonna like.

At some point with enough data amassed amongst enough businesses right, we can start finding those connections and making recommendations, actionable recommendations to businesses as to how they could improve one of these dimensions, which in turn is projected to increase performance in one of these downstream areas like profitability, productivity, retention, customer service.

- Yeah, data is another interesting word because I think a lot of times, especially in my business, you have a lot of data.

- Yeah.

- You don't know what to do with it.

I mean, we're data rich.

- Absolutely.

- But we don't know that next step.

So what do you tell a business that's data rich?

- Yeah, I think the first thing, when we look at organizations and I think it's critical to review data in and of itself, as what I'd say is a refined resource.

And we relate this all the time for people to understand, to a parallel oil, right.

We discovered oil in about 500 BC and it would be 2,500 years until the world would view it as a usable, viable and valuable resource.

And it wasn't the discovery of oil that made it valuable.

It was really the invention of refinery.

The idea that we could take a crude resource and transform it into something that could be used, right.

Something that would power heat, and lighten transportation.

Human beings have collected data or information since the beginning of time.

But really we had to have, what I'd say is an innovative breakthrough that could transform data from its crude state, right, into a usable and valuable fuel source.

And the economist in 2017 wrote an article.

And that article's title is, the world's most valuable resource is no longer oil but data.

And it was a profound article at the time.

It was slightly controversial.

But what they understood is this, there is the convergence of really three things.

The first thing that we have is broadband connectivity in an entirely new way in this stimulus plan that's being discussed even today, there's $56 billion attributed to getting 4G across the entire nation, even in rural America.

We say that connectivity is important because that creates pipelines a series of ways for data to be transferred, right?

Once now you have a transportation system.

Now you have the desire to create it, right?

And so we have transformed everything, our phones, our watches, right, our cars into devices to create this resource right, to increase the supply of information.

And so now not only do we have supply and a way to transport it, the last critical functions, we have something called Cloud computing.

It's put in every single one of our hands, something that we would call infinite compute, that's a refining capability to make sense of data, right?

To run things like artificial intelligence, to find connections we could have never before seen and draw insights that have never before existed and as a by-product right, helping businesses understand the difference between the data that you've had that lives in a fragmented state versus the potential that your data could have if we indeed refine it, right.

Into something that can be usable, predictable, and insightful.

- And those connectivity that's happening also equals revenue.

- Absolutely - Potential revenue.

- Absolutely.

- Yeah, that's an interesting.

Trent, just to kind of a funny side story here, I'm go off script here.

I was thinking you have five kids, you have a great family, five kids, I have five kids.

We can play basketball.

(laughs) basketball team.

(laughs) All right, joking aside.

So when I was talking to both of you were discussing disruptions in business.

And after I spoke to you about that, I started thinking about every sector that you could think about.

And every sector really has been disrupted some way or another, or that is somewhat dying in a sense.

And so in your business, in the insurance business, you think old school stuff, you think, okay, I'm gonna call my insurance agent.

He or she is gonna be there for me.

And if they need to meet him somewhere and this, that's not how it goes this day and age, right.

- Well, you're right.

The insurance industry as a whole is very antiquated.

It has an antiquated distribution model.

It has an antiquated system of actually how the risk transfer mechanism works.

The risk transfer mechanism actually works very, very well.

If it's a covered risk, the forms will state what's a covered risk, then it will pay.

The problem is, is that you said it earlier, when we were going back to that conversation about reactive, everything inside the insurance industry is a reactive state and so what we're trying so hard to do is to try to be proactive and again, I know that's somewhat of a buzzword is how you be proactive in any kind of industry or business model.

But what we're finding is, is that the organizations that we're working with.

We'll do the insurance thing really, really well.

That's not really a problem for those companies.

Insurance is not their problem.

The problem for today, in today's world is employee engagement, employee retention, hiring.

I mean, let's be honest, you stop and think about some of the companies that we're talking about and how many employees they can currently use or need right now in the marketplace, it is profound.

And so if we can help, we can truly provide value in those areas, now we're disrupting the industry.

The insurance piece will come along with it, but these are the areas that people need.

These are the areas of concern for business owners and for business CFOs and CEOs.

- It's interesting because I've never seen a market to where there's so many open positions.

And in my business, we have a lot of open positions and I think the difference, and I'm not saying anybody, others somebody's business isn't as important.

It's very important to them and to community, but in my business of helping the community and having the kids of the community and the state, it means potentially lives.

- [Austin] Absolutely - Not just money.

- [Austin] Right.

- And so most people think of open positions.

You're thinking of a restaurant.

I don't have enough servers so waiting times go up 10 minutes.

- Yep.

- But when you go from sector to sector, there's a ripple effect across the whole country right now, but we'll just take it to our community.

Let's just say middle Illinois, there are every sector right now is looking for that piece.

And so that even justifies exactly what you're saying, the need, the insurance is just the bread and butter.

That's what we do.

- That's right, That's just the beginning.

- Exactly right.

But there are so many other facets to what we need to do to be able to stay relevant sometimes, or to prosper and grow our business over that next three to five years to talk about, really what we're talking about.

You need to take that strategic piece, that strategic plan, I'ma switch gears again.

So now that disruption over here, Austin, farming, we have a lot of viewers that grew up on farms.

We have a lot of farmers that watch this show, but that business has been disrupted.

Why don't you explain that?

- Yeah, I think we viewed farming as a rural trade for a long time.

right?

- [Matt] Right.

- And you work the earth and you manage your land and you grew a crop and there was this deep affinity and I don't wanna say that that still doesn't exist in the farmers today.

I think we saw one thing that really changed.

It used to be you bought land and you form your land.

You produced a crop and you traded your crop right?

And we had lots of small farmers at one point, agriculture actually represented 25% of the population of the United States of America, which means it was significant political force, economic first and social force, right?

We were deeply connected to the sector of Arg.

Today That number has gone down all the way to about 2%.

What we've seen no different than all the other industries you've mentioned disruption, right.

Is we have seen disruption.

We've seen consolidation.

We've seen larger and larger farmers as they get bigger scale, right.

And broader reach be able to farm at increasingly better rates, right?

Both from a yield perspective and a profitability perspective.

And as we've seen consolidation, there's another stat.

78% of agriculture production today in corn and soybeans is consolidated in 9.3% of farmers.

Take that even one step further, 3.5% of farmers represent roughly 52% of agriculture production today in the United States.

- [Matt] You gotta be kidding.

- No, and so when we talk about what disruption looks like, right, the first thing is consolidation.

We are seeing larger and larger farmers.

And to an extent we are seeing the greatest yield increases ever, we're getting better.

But simultaneously something else has happened is we're losing our reach to the farm.

We're losing our impact of the farm.

If you look out West, I was talking to a grower last month and they run a potato farm operation.

And so we are now talking about something like water rights.

And for the first time ever in the history of their a 100 year farm operation, they had their water pump shut off.

The issue becomes this.

When you farm in Sandy soil in Idaho, you need water every single day.

And at some point we are seeing, what I'm gonna see is a battle.

And it's not even a battle that's well understood, it's the town sits there and says, we want our fresh water.

And you have the farm that sits there and says, no, we need water for our food supply.

And unfortunately, again, when agriculture is 25% of jobs and economic sector, they have a voice, they have a force.

The problem is today that voice is dying.

That voice though it's being consolidated in size, is no longer relevant in the same way it used to be.

And so this battle that we're gonna find in agriculture is just really beginning.

- And water's the hottest and most valuable commodity there is.

- It is when it comes to farming.

The majority, yeah, absolutely.

The majority of when we look at farming, right?

Especially out west, especially in a lot of specialty crops, irrigation is critical.

We've transformed land that previously was unusable into something that's valuable.

That's being now utilized right, and leverage to, abate food supply issues around the world.

The problem is, again, that was based on the development of irrigation and the idea that we could take pivots, plant them strategically, and again, transform unusable soil into something very, very valuable.

- And is the Midwest still the king of farming with the land that we have here.

- Yes, Midwest is still for what we call our row crops, corn and soybeans.

It has the best dirt in the world.

If you even go down to areas of Kentucky, they have three inches of topsoil at times.

And so you look at how you grow crops on three inches of topsoil, managing erosion, right.

It's just different.

We have up to 10 foot of topsoil in some counties in Illinois.

And so if you look at the disparity and the difference, right, it's still the richest land, the most fertile land and the most productive land in the entire world.

- [Matt] That's crazy.

- It is.

- Yeah, and you have a company part of Ledgestone, I think that is Verdova is that the name of it?

- Yeah, we have an organization called for Verdova.

We aren't focused on the water issues.

That's what we'd say a little bit out of our control, but you mentioned another resource called data.

And when we look at agriculture, right, there is like all other organizations and all other industry segments, there will be a fight over data.

We re referenced FAANG all the time, right?

Apple, Amazon, Google, Facebook, and Microsoft, the top five most valuable companies in America.

And we say that though, they play in different sectors, right, though we would categorically view them as different organizations.

We say, they've done one thing consistent across each organization.

And that is, they have monopolize the pipelines and the refinery source of data within their respective industries.

And that data in turn has enabled them to have infinite scale, broadened scope, and advanced learning effect which has created for them kingship positions within their sectors, no different than John Rockefeller, right.

Monopolized the pipelines and the refinery source of oil in the 19th century.

- Well, I mean, just like any business, you talked about those FAANG companies.

What they're known for, if you look at their balance sheet is they're cash rich.

They print cash and it no different than when we're talking about the farming industry, those efficiencies that you're talking about and that data that they can use actually tightens their grip on the business, because they're gonna be able to make more money.

- [Austin] Yeah.

- My brother was a trader on the board of trade and he was there during the time where he's yipping and yelling and doing all that stuff.

And then all of a sudden technology got better.

And when that technology got better, these people on the floor started just saying, you know what?

I can either do this at home, or it's time to look for a different job.

And I think that's what we're talking about here.

So this is very interesting.

Going back to morale, if I came to you and said, "Trent, I'm having an issue just with overall employee engagement, that's what you're saying you do, you work on, right?

- Absolutely.

- One of the things.

- Yeah, that is one of the critical components of what we work on absolutely employee engagement, because we think that it drives so many other things.

It's what's gonna drive that retention.

Retention drives profitability.

Obviously, when you stop and think about what it costs, organizations who lose employees to other organizations, we always say this, the key differentiator in almost any market segment is the people.

The people are what you cannot duplicate.

You can duplicate products, you can duplicate a lot of things.

You can't duplicate an organization's people.

And we've been very, we've been focused so highly in this area internally inside our organization.

That when we started seeing, as Austin said, when we started seeing the best practices of our safety company and how it was helping drive those efficiencies with organizations, that component that was the connecting piece, was that the businesses that said, we wanna take our people seriously.

We want them to return to work.

I'm sorry, return home from work the same way they came to work that day.

What's the key driver behind that?

There's a mentality or an initiative for those employees that has to start above and beyond.

It starts with leadership and it filters throughout the organization.

- Well, this is a great, a great show.

We're gonna do this again because I wanna go back to the farming piece.

So I appreciate Austin, you're coming in here.

Trent, this has been awesome.

Ledgestone look it up.

It's a great company, great people.

I'm Matt George and this is another episode of "Business Forward."

(ethereal music) - Thank you for tuning in to "Business Forward."

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