The G Factor

Under scrutiny from overseas customers, a manufacturer improves its operation.

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Overseas-sales revenues are the least important result of exporting, argues Labconco's John McConnell. The real benefits of going global -- and the best reasons to do it -- turn up inside your company

Anyone can see that John McConnell runs a global business. Just look at his desk.

There's not much there. Off to one side sits a 95-page strategic plan. And your eyes can't miss the sheet that serves as his schedule, a grid of the month with every meeting typed in -- is it really possible to type that small? -- with times. Just now, shy of 9 a.m., McConnell is handing off his dictaphone, which is exhausted from an early morning of taped heart-to-hearts. He returns to his desk and sits, back ramrod straight, hands folded before him. "There's a certain discipline to the way we work around here," says the chairman and president of Labconco Corp. as he checks his watch. "Our foreign customers have taught us to be hard on ourselves, and we are."

Indeed the gleam of McConnell's polished desk radiates everywhere at Labconco, a maker of laboratory equipment. The company's numerous conference-room tables shimmer. Then there's the scrubbed tidiness of Labconco's in-the-round training room, where, rumor has it, it is possible to watch the hometown Kansas City Royals play amid the satisfying roar of surround-sound. Most days, though, the only lineup that appears there consists of samples from Labconco's half dozen or so product lines. "People come from all over the world to study these," says McConnell proudly.

Those visitors, he contends, exert an influence that seeps into every corner of Labconco, which posted sales of $28 million in 1990. No aspect of the company has remained untouched, from the way employees inspect products, to the design simplicity that guides engineers, to, yes, even the rigidity that McConnell and his executives bring to bear in organizing their own offices. "I could argue that it's our management or my leadership that does it, but really it's tough customers that make for better businesses," declares McConnell. "Foreign customers made us better in every way. That's the real benefit to going international."

McConnell, who counts on Canada, Europe, and Japan for 20% of sales, advances an intriguing and original argument: sell over there because it will make your company better over here. In recent years, as the nation's trade deficit has swelled, most cheerleaders for exporting have balanced their support for it atop a wobbly pyramid, preaching its virtues as the ultimate in civic responsibility. On the other end of the spectrum, brand-name futurists have warned that companies that do not don their global thinking caps will find themselves overrun by foreign intruders. But the 230 or so employees at Labconco consider such arguments largely irrelevant. "The company as a whole has just become more sophisticated as a result of emphasizing international," says Steve Gound, vice-president of finance. "From a product standpoint, from a marketing standpoint, and from a manufacturing standpoint, it requires you to think more about what you do."

Labconco has taken the challenge seriously. This is not a company where the CEO, flitting through Europe on vacation, stumbled upon a similar type of product and scrounged up the distributor. Labconco has moved far but not fast. "We're not big on bold strokes," admits McConnell, 52. "There's no ranch betting."

Until 1974 Labconco's principal offerings -- fume hoods -- were too weighty and price sensitive to travel well. But that year, sensing a gap, the then-$5-million company expanded into laboratory freeze dryers. Japanese distributors began to show interest. Eventually, Labconco chose one of them -- commemorating the crowning in 1977 at a sake-drenched banquet, during which Mark Weber, now national sales manager, dimly recalls bellowing out his college fight song.

But Weber, backed by many of his colleagues, was soon warbling a sadder tune. "The relationship turned rocky," he remembers. "The Japanese were constantly making not-so-subtle suggestions about our products. And they were adamant, even about things our folks thought of as superficial." See that paint scratch? they'd say, virtually handing McConnell a magnifying glass to examine it for himself. If a freeze dryer leaked some refrigerant in transit, Japanese engineers didn't just refill it, as domestic customers might. They called Labconco with suggestions about how the company might rethink its freon-charging methods. They were brimming with opinions: a better way to fit this part, a coating that would cut down on corrosion, and by the way, do you care that this unit's bladder could conceivably rupture if the user forgets to turn it off? Visiting Japan, McConnell reserved a special dread for pilgrimages to the service center, where they'd display Labconco products and then read aloud their deficiencies.

Not all of the distressing demands centered on quality; the distributor also wanted a 2% price cut. McConnell felt inclined to grant it, especially since Labconco's revenues in Japan were some $1 million by 1979. By 1982 Asia accounted for 10% of Labconco's nearly $15 million in sales. But that growth didn't come quietly, and the badgering rattled McConnell. "I got to the point where I didn't feel good about our level of quality."

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