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VMA Forum: The Challenges of Leadership

Sam Deep largeSam DeepCyber security, trends in distribution and how to become a better leader were among the topics presented at the 32nd Annual Valve Industry Leadership Forum, which took place in Atlanta on Jan. 16 and 17. Also on the agenda, which focused on the numerous challenges leaders face every day, were a Wall Street appraisal of the economic conditions affecting the industry and an examination of the political climate in the United States.

A Rough Day in the Life of a Leader

While many people strive long and hard to get a position with a “corner office,” along with the perks of a leadership position come challenges that ensure leaders earn their salaries. In an engaging half-day workshop, leadership guru Sam Deep gave forum participants an opportunity to consider eight specific challenges that an executive might encounter during the course of just one day.

Deep asked members to pair up to consider the various challenges and to come up with suggestions as to how they would deal with each situation. Scenarios ranged from the best way to handle insubordination by an employee to figuring out how to get your team on board when your boss asks you to do something to which you know your team will object.

After the pairs had an opportunity to discuss their own ideas, each shared their responses so that everyone could benefit from the different points of view. Deep’s engaging and humorous presentation style helped convey his message on how to become a better leader, something that he said "everyone in this room is capable of."

The Wall Street Perspective

Scott Graham Wall St PerspectiveThe Global Valves Market, Courtesy R. Scott Graham, JeffriesWhile the day-to-day challenges of management seem never-ending, factors outside your organization also have a huge impact on leadership function. To shed some light on the broader financial situation that impacts the valve industry, R. Scott Graham of the Jefferies investment house presented a Wall Street perspective of the $75 billion worldwide market, and tabulated each of the four main markets for valves.

Oil and Gas: This market accounts for $600B of capital spending globally, and, Graham predicted, will see slower growth going forward as the current economic cycle progresses. “We do not expect another super cycle,” he said, “but possibly an elongated cycle.”

Changing demographics and the rise of the middle class in BRICs (Brazil, Russia, India and China), more complex recovery methods needed in places such as the oil sands and the sub-salt in Brazil, new shale discoveries and specialized markets such as floating LNG and re-gasification and liquefaction of natural gas all will contribute to the expected 4% to 5% growth in this market.

Water & Wastewater: Globally this market is currently $500B, but by 2035 Graham expects it to be $800 billion to $1 trillion. In the U.S., the EPA’s “2013 Drinking Water Infrastructure Needs Survey and Assessment” report indicates the country needs approximately $384 billion invested in its drinking water infrastructure through 2030. About $250 billion of the investment will be geared toward replacement or refurbishment of aging water distribution and transmission lines. Despite this huge increase in need, spending is not expected to rise significantly in the U.S. until the second half of 2014, and spending in Europe will remain weak. Growth in BRIC countries will be two to three times higher than domestic.

In a rather chilling forecast, Graham cited statistics indicating that demand for water could outstrip supply by 40% in 20 years, and that 37% of the global population will face absolute water stress by 2020.

Chemical: Long-term drivers of growth in this area include the fact that production is moving closer to feedstock, especially in developing regions. Also, the chemical majors are signaling significant investment in U.S. ethylene-based low-cost feedstock available from gas shale and many of the new projects will be located with or near refineries. While European activity in this market is flat and is anticipated to continue its decline in the short term, Graham projected a mid- to single-digit increase in U.S. capital spending this year.

Power: Demand for urbanization, industrial, process and structure uses are among the long-term drivers of the $230 billion global capital spend projected for power. And, while the IAEA expects slower growth in the nuclear sector post-Fukushima, several countries are preceding with nuclear development plans, so this will continue in the energy mix. Slower global GDP reduced electricity consumption, which affected new build spending, but the improving economy in most developed markets and the expansion of service in developing nations is expected to contribute to a very modest increase in spending through 2014.

A Polarized Political Climate

Abramowitz politicsCourtesy Dr. Alan Abramowitz, Emory UniversityIn a presentation on “Politics and Policy in a Polarized Era,” Dr. Alan Abramowitz, professor of political science at Emory University, was cautiously optimistic about the current state of politics in the U.S. While the problems of long-term unemployment and a slower-than-expected economic recovery still shadow the government, there are positive signs moving forward in 2014. Real GDP growth of 2.7% in 2014 and 2.9% in 2015 is projected, with 2.4 million net jobs to be created during 2014. Inflation is expected to rise only slightly, and consumer confidence is up.

While these economic signs are positive, the socio-economic trends make for ongoing American political uncertainty. Dr. Abramowtiz cites changes in media structure and campaign finance laws that reinforce partisan polarization along with globalization and growing economic inequality as just two of the factors that create challenges for both political parties.

The Evolving State of Distribution

Steve BassilSteve BassillSteve Bassill, president of QDI Strategies, explained the “Changes in the Role of Distribution” that are having an impact on the valve industry worldwide. He characterized the historic role of distributor as that of an extension of manufacturer and compared it to the shifting role, which is more like an extension of the customer. This creates a near complete re-alignment of the business model.

For example, distributors were historically sources of information about products. But with the explosion of Web technology, it is easier for customers to learn, buy and get product support directly from the manufacturer. Bassill said, “The information value that the distributor used to provide has diminished or is gone. All the information on the internet means that the customers don’t need distributors to train them.”

That leaves distributors with a much different role, with services becoming increasingly important to their company’s growth. “It’s not about your product. It’s about the customer’s business—what he needs,” said Bassill. “Distributor relationships with customers increase as levels of service increase. The more important a distributor is to the customer, the more impact the distributor can have on his suppliers.”

There are so many changes in the distribution model going forward, this topic will be covered in much greater depth in an upcoming Web feature and a column in VALVE Magazine.

The Frightening Rise of Cyber Attacks

Scott Henry Crowdstrike ServicesShawn Henry Shawn Henry of CrowdStrike Services said that while everyone is concerned and horrified over the recent theft of millions of credit card numbers from Target and other retailers, this is not what we should be worrying about. With his background in the FBI, Henry has knowledge of much more frightening scenarios, such as major corporations having their entire "DNA" breached and stolen. Henry also revealed there are numerous terrorist groups that want to commit "electronic jihad" against America.

"The industry is malware focused," he said, but "you need to be adversary centric. Not enough people are concerned about this. Recognize that this is one of the most significant risks your company faces."

Henry noted that there are dozens of countries that have electronic espionage programs in place, looking to steal information from competitors. This translates to hundreds of billions of dollars in intellectual property being stolen and warned companies to be proactive in their approach to this threat.

He offered several recommendations including what should seem very obvious… Accept it is one of the most significant risks your organization faces! “As a leader, you must consider it important, because if you don’t, then your staff won’t think it is important. The response must be organization-wide,” Henry advised. “Have a very candid conversation with everyone to be sure they understand how important this is.”

Watch VALVE Magazine.com over the next several weeks for further information and tips on how to deal with the threat of cyber attacks.

This email address is being protected from spambots. You need JavaScript enabled to view it. is senior editor and This email address is being protected from spambots. You need JavaScript enabled to view it. is editor in chief of VALVE Magazine. 

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