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OPINION: Ergon has succeeded on sound fundamentals

Launching a successful new business is no easy feat. According to U.S. Small Business Administration (SBA) statistics, almost one-half of the businesses launched each year will be closed within five years. Building an enduring company that stands the tests of time is even harder. The SBA stats show that only 29 percent of companies survive for 10 years. In the dotcom boom of the 1990s, many companies were built to flip. In contrast, some business founders launch their companies with a vision to span multiple generations. Success often leaves clues, and I am intrigued by how some companies seem to beat the odds and build large sustainable organizations that can transition generationally.

In 1954, Leslie B. Lampton, with an entrepreneurial mindset and solid work ethic, launched his first company, Lampton Oil Company. Today, this company has evolved into a diversified portfolio of companies known as Ergon and encompasses 50 companies divided into six business segments of Refining & Marketing, Asphalt & Emulsions, Transportation & Terminaling, Oil & Gas, Embedding Computing, and Real Estate. Mr. Lampton is still chairman of the company, but an executive committee including his four sons runs the privately-held family enterprise. The company and its more than 3,500 employees serve customers throughout the United States.

While there has been no magic bullet of their success, the Ergon team has adhered to the sound foundational principles of people first, diversification, syngergism and accountability.

People

Ergon has always emphasized a need for attracting and developing talented people. Beyond just aggregating a great team of workers, the company displays a genuine concern for its people. This is a top-down philosophy that manifests in decisions that the company has made over the years, which often put the needs and concerns of employees over short term financial gain.

Diversification

While some companies ruthlessly adhere to a single-focus concept, Ergon has successfully deployed a strong diversification strategy. Often diversification has grown out of vertical integration opportunities that lead into broader business development. Most of the subsidiary companies have some logical connection to each other and often provide complementary services. The diversification strategy has also afforded the second-generation Lampton family the opportunity to effectively utilize their own personal strengths and avoid duplication of efforts.

Synergism

When a company has a diversified operation like Ergon, there is an ability to leverage centralized systems and gain efficiencies throughout the organization. When you can systematize basic functions such as accounting and risk management, it allows the operating subsidiaries to more intensely focus on product development and marketing. Historically, high-performing diversified organizations like GE have similarly utilized this synergistic strategy.

Accountability

A trait most successful organizations I see have is an emphasis on accountability. Accountability has been particularly important as Ergon passes generational leadership. Having clear and objective rules and processes helps avoid family disputes. In addition, an emphasis on accountability builds an execution-oriented culture that pays attention to results.

Most of Ergon’s companies sell “business to business” versus to consumers, so they may not be a household name. However, Ergon has been a company that for over 50 years has been making a positive impact on the Mississippi business community. Thankfully, the vision of Mr. Lampton to build an enduring company is being successfully transitioned generationally. Beyond the core principles described herein, other footprints of success that I have observed are a strong entrepreneurial spirit in the organization, which drives it to take calculated risks, a true humility about success and a strong work ethic. For today’s developing Mississippi entrepreneurs, there are many instructive lessons to be learned from the path blazed by the Lampton family and the Ergon team.

Martin Willoughby is a business lawyer in Jackson. He can be reached at mew@msbusinesslaw.com.

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