The marketing department was added only after "there was more stuff than I could do anymore," he says. BBC now has some 400 collateral items with which it supports its sales staff, including the samples of fresh malts and hops salespeople bring with them for accounts' hands-on chewing and sniffing. Koch insists he still doesn't understand marketing -- billboards, commercials, and the like. "I understand beer. The rest has gone beyond me. For years there wasn't a job in the company I couldn't do better than the person who was doing it. That's not true anymore. We'll get to a point where there's not a job that I can do as well as the person who's doing it. The sooner that comes, the better," says Koch.
Despite his business-school education, Koch favors simple rules throughout, "so people can understand and visualize and don't have to try to imagine what you mean." One area is hiring and firing, where the rule is, Don't hire anybody unless it improves the average of the company. "It's a wonderful rule because administrators can imagine what the average person is like; there's a fairly clear standard in their head. They look at this person and they can say, 'Yeah, they're better,' -- or, more likely, 'No, they're not better than our average.' If you don't do that, what happens," Koch explains, in a hipbone's-connected-to cadence, "is, when you start on a scale of one to 10, you hire 8s and 9s and 10s. Then you start hiring 7s, and the 7s hire 6s, and the 6s start hiring 4s and 5s. And before you know it, what started out as 8s, 9s, and 10s is 4s, 5s, and 6s on their way to becoming ones and 2s and 3s." BBC's three full-time recruiters wait -- and wait some more -- to find someone who ups the average. They recently took two years and went through 2,000 rÉsumÉs to hire a sales rep for Arizona.
Patience must be a virtue, because no one has quit the BBC office in five years. The turnover rate in the sales force is less than 15%, and among salespeople there for at least three years, virtually zero. Although BBC has a professional tour director who walks visitors through the brewing process at its showcase plant, the company also encourages employees to put in some overtime as tour guides. "It's important to get everyone in the company involved in presenting us to the public," says Koch. "When your employees are proud of what they do, and what they make, and the company they're a part of, it shows; it's an unquantifiable asset. So I'm happy when truck drivers ask to do tours."
In its fundamentals, brewing parallels what Koch already had learned about manufacturing when he was a consultant to paper mills and chemical plants. "I respond to the romance, the soul, the heritage of beer, but also to the unromantic adherence to details, the nitty-gritty that leads to quality," he reflects. "For quality to have meaning, it has to have a definition. In manufacturing, quality means conformance to specifications. In that mundane sense, Samuel Adams is a beer that's consistently good, that therefore conforms to specifications, that thus has quality."
But for all his determination and celebrity, Koch isn't satisfied. "I come from a German brewing tradition, not an English brewing tradition. English batches taste different; some are better than others, and that's part of their fun. My brewer's ethic is that every batch should be the best, should even be perfect. There is a perfect Samuel Adams. I can define it analytically, and I can taste it. My job as a brewer is to get as close as I can to the perfect Samuel Adams in every bottle. How often do I get that close? Maybe only 10% of the time. But the fraction I'm off by, you couldn't tell the difference."
RESUME
C. JAMES KOCH
Boston Beer Co., Boston; founded in 1984
$180 million in 1995 revenues; $14 million in pretax profits
Born: Cincinnati, 1950
Parents: Father, brewer; mother, schoolteacher
Education: B.A., Harvard, 1971; J.D./M.B.A., Harvard Law and Business Schools, 1978
First Job: Corporate adviser, Boston Consulting Group, 1978-1984; compensation approximately $250,000 a year
Other Experience: Instructor in mountaineering, Outward Bound, 1973-1976; compensation $0
Other Companies Started: None
Role as CEO: "To create change, to make Boston Beer a constantly different company. I like challenges; I like building. I get up in the morning to build. When I look at a garden, I want to see what grew, what blossomed, that's different from the week before."
Failures: Writing off $2.2 million in 1988 when he scrapped brewery-construction project. Realized that at that moment he had made negative contribution to economy by writing off more money than he'd ever earned (an imbalance since corrected).
Family: Married to Cynthia A. Fisher, CEO of Viacord, a biomedical firm; two teenage children from previous marriage
Heroes: Eric Shipton, "the last great explorer," who at age 75 became first to cross Patagonia ice cap. William Butler Yeats, because he wrote his own epitaph
Hobbies: Flower gardening; participation in inner-city youth programs
Quote: "What do I regret? I worked for [GE's] Jack Welch, and I competed against August Busch. I'd rather have had it the other way around."
