November 10, 2005
New National Structure Puts
SCI Ahead Regionally
by Asher Garonzik
When Thomas Ryan, president and CEO of Service Corp.
International (SCI), faced the task of rescuing his drowning company
in the early 1990s, he opted for revolution instead of revision. “We
were looking to change the motor on a sinking boat, but there are
four holes in the sides,” he said. “We had to fix those holes before
we could move forward.”
Ryan’s innovative ideas, which he described in his Nov. 3 talk for
the VIP Distinguished Speaker Series, helped pull SCI out of serious
debt and grow it into a nationally branded company—the market leader
in funeral, cremation and cemetery services.
SCI’s original strategy—purchasing small, locally owned funeral
homes, bringing those businesses under one umbrella company and
managing their cooperative interactions—was based on the idea of
providing customers with service that felt personal and familiar.
But it wasn’t long before executives realized this method had
inherent flaws. First, the mom-and-pop “face” of SCI’s local offices
proved off-putting to potential customers who wanted the efficiency
and convenience of a nationally recognized company.
“The companies getting killed today are the neighborhood grocery
stores,” Ryan said. “We were the neighborhood funeral home.”
The strategy also led to inconsistencies from one district to the
next. Because each small funeral home’s managers had different ways
of conducting their own businesses, SCI found that establishing
uniform, company-wide policies and procedures was difficult.
SCI’s new practice of standardizing policies for all funeral homes
has effectively righted these wrongs and then some. Now, instead of
relying on the local feel of its subsidiaries, the company
determines the type of service needed at each location, based on
demographics. For example, in wealthy neighborhoods, they might set
up a full-service funeral home—it’s more expensive but it offers
more luxuries. In a densely Catholic region, SCI might establish a
home that caters to the specific religious needs of its customers.
Ryan asserted that the hardest part of the company’s large-scale
transformation was convincing its thousands of employees to buy in
to the project. “My problem was figuring out how to get 19,000
people fired up about this and make it happen,” Ryan said. But he
made it happen.
“In order to be successful in a nationally branded company, you have
to have a set of rules everyone can live by,” Ryan said. Today, with
its new mode of operation, SCI earns roughly $17 billion in annual
revenues.
Notable Soundbites
On the funeral business:
“Everybody is trying to chase the baby-boomer demographic,
but we are definitely going to get them.”
On SCI’s downturn:
“When things are bad, your friends don’t return your phone
calls.”
On how SCI revived themselves:
“Save our ship, increase cash-flow, pay down our debt. That
was our mantra for a few years.”
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