How one company grows and prospers by taking the best ideas from big companies.
How Jack Kahl has grown Manco Inc. by taking the best ideas from big companies
The way he's clutching the piece of mail, you'd think John Kahl had just been served with a subpoena. Without so much as a knock, the 28-year-old marches into his father's office and interrupts a meeting. He tosses a postcard onto the middle of the round wooden table. "Look at this," he orders.
Jack Kahl, president and chief executive of Manco Inc., which markets a line of tapes, weather stripping, and mailing supplies, picks up the card and studies it. As an earnest look consumes his face, he passes it on to Tom Corbo, the company's 38-year-old vice-president of marketing and research and development. Corbo, a former all-American wrestler with a passing resemblance to Robert DeNiro, looks at it, frowns, then cups the card in his palm and thumps it down on the table. "I've never seen this," he says. As his hand drops away, the postcard becomes visible. It's there for anyone to see.
Few, however, would appreciate the card's greater significance. It looks an awful lot like every other coupon from Domino's Pizza.
By now John, who has inherited his father's enthusiastic and absorbed manner, has begun detailing the coupon's origins. He explains exactly how his life has reached the point whereby the next time he orders pizza, he will receive two free Cokes. Corbo leans forward and begins scribbling on the yellow pad that is practically an appendage. Jack Kahl fixes his blue eyes on his oldest son, Manco's national sales manager. Stumbling into the room, you might think you had interrupted a self-help group for pizza addicts.
In reality, you would be venturing into the heart of Manco. For no sooner has the younger Kahl finished his story -- the pizza was late, so Domino's gave him $3 off, then unexpectedly mailed him this bonus -- than the analysis begins. Why, exactly, does Domino's believe it must do more than give its standard discount? "Domino's knows it costs six times as much to get a customer as to keep one," says Corbo. How do customers react to getting the surprise coupon? "I'm not going to order again because I get two free drinks," confesses John, "but I'll order because Domino's thought to send the coupon." Soon everyone will take a swipe at solving the central mystery: What can Manco learn from the Domino's approach?
There has to be something; that much Jack Kahl knows. A detective of sorts, he makes it his business to trail other companies, untangling their motives and learning as much as he can from their moves. "Business is easy," says Kahl. "If you want to be a smart company, you study the smart companies."
Kahl doesn't mean keeping a watchful eye on competitors. And he's not talking about tracking entrepreneurial enterprises like his own. When Kahl says smart, he means big. CEOs who neglect to systematically scrutinize big companies through such available sources as annual reports, magazines, and books, he argues, are missing out on the most helpful database around.
What makes him so sure? Since 1977 Kahl has transformed the company from a $4-million distributor of industrial tape to a retail supplier with sales of $60 million. And he's done it, he'll openly admit, thanks to the help of some very effective teachers. He readily rattles off their famous names: The Walt Disney Co., Wal-Mart Stores Inc., and others. "You've got to keep your eyes on the giants all the time," Kahl says. "Our eyes are focused up."
On the surface, it seems presumptuous for Kahl to think that Manco could possibly borrow ideas from, say, PepsiCo Inc. Sure, big companies might face some of the same problems that small ones do, but their solutions could be less than instructive. Having trouble motivating your people? Hurl giant bonuses their way. Product lines faltering? Time to take a write-down. R&D lagging? Have your headhunter scare up some talent. Fine ideas if your company happens to be drenched in resources.
Kahl doesn't deny that big companies often solve -- or at least obscure -- their problems by dipping into deep wells of people and money. But he avoids that trap by carefully stripping big-company methods down to their fundamentals. "We see Pepsi promoting its product as a lifestyle, showing happy people using it," he says. "We know we can do that with duct tape. We don't have to spend what Pepsi spends to advertise it." Furthermore, established, older companies can point to something that younger role models usually can't: results.
What's more, Kahl doesn't copy ideas; he replants them. His most diligent work has involved creating an atmosphere in which ideas can grow. It's no coincidence that Manco's headquarters looks like a college campus; a three-quarter-mile jogging and walking trail stretches around trees and lakes. And there's no shortage of inspiration. The walls are lined with the thoughts of philosophers ranging from Socrates to Ben Franklin to Greg Klein, the company's vice-president of finance. Each Manco executive selects one quote to be tacked up outside his or her office, etched on a green sign with yellow and red stripes. Kahl tapped Socrates: "One thing I know, and that is that I know nothing."
In every way he can, Kahl reinforces the importance of learning. The company's Spirit Award, its highest honor, recognizes curiosity. And that famous Greek interior designer, Plato, influenced Kahl's thinking about office geography. Manco's eight vice-presidents don't occupy the window offices; instead, their offices are clustered in the middle around the room where new merchandising ideas are discussed. Action Alley, as it's called, is modeled on the Greek city-state, where brainpower emanated from the middle. "To learn anything, you go right to the center of this company," says Kahl, who is 50.
But finding good ideas is only half the process. Driven by Kahl's own relentless need to understand, the company hungers to put ideas into practice. A kind of creative dissatisfaction roams the halls of Manco's headquarters, in Westlake, Ohio. It has a library crammed with books and a classroom that everyone calls Manco U.
Manco also conveys an almost overbearing openness. Wander into the cafeteria, and you can't help but partake of the company's financials. On one wall, different colors of duct tape trace sales growth over the past three years. Next to that, a chalkboard breaks out daily sales as compared with last year's. Above the vending machines, in green, a bar graph tracks the per-share value of the company's employee stock ownership plan since 1985 -- it's calculated by an outside firm, since Manco remains private. Concerned about efficiency? The writing is on the wall. Productivity? Stats on percentages of orders completed on time can be found next to the entrance to the production floor. If you still harbor doubts about the company's viability, seven LED displays throughout the company provide an up-to-the-second account of the action in sales. On one recent afternoon, when the signs flashed the news, "We cracked a 750-store drug chain," all 170 or so employees burst into applause.
