The founder of a billion-dollar company explains why you have to behave like a great company in order to become one.
You've got to behave like a great company before you can be one
Business owners like to believe their companies have some kind of edge on the competition. "Our prices are better," they say. Or, "We're the quality leader." But forget those bland generalities and consider a tougher challenge: What does your company offer that customers simply can't get anywhere else? Unless you can answer in fewer than 10 words, you don't really have a competitive edge--which means that you'll always be jostling for position in the middle of the pack. Personally, I'd rather be out in front. And the way to get there is to be able to do something that the other guys just don't know how to do.
Developing that edge isn't easy. It involves a huge commitment of time, money, and effort. Some people will think you've gone off the deep end. But if you pull it off, the payoff is immense.
Let me illustrate. When my partners and I started Physician Sales & Service (PSS), in 1983, most doctors bought supplies from companies selling to hospitals and nursing homes. Those distributors loaded up their big trucks and stopped by a doctor's office maybe once every couple of weeks. If a doc ran out of syringes between visits, it was tough luck--mostly for the nurse who got blamed for not keeping enough on hand.
We introduced much faster service to the industry. We took orders and delivered them in spiffy PSS vans the very next day. The physicians and nurses loved our service, and we were able to charge a little more for what we sold. Soon we had branches all over Florida, and we began to expand into other southeastern states. As we grew, of course, we bumped into more competitors. Some of them started to offer next-day service, too. So we raised the bar. We bought our salespeople laptop computers with special radio-frequency transmitters. Then they could take an order in the morning and transmit it to the warehouse on the spot. The items would be on a truck headed for the doctor's office that afternoon.
The same-day service was an even bigger hit with our customers, and PSS grew some more. So we set an audacious goal: to become the first national physicians' supplies company in the United States--and top dog in our industry.
Our competitors, unfortunately, weren't about to step aside, at least not without a fight. One competitor in particular--Taylor Medical--really began to gnaw at my insides. Taylor was a great company, and we went head-to-head a lot. Just as we were committing ourselves to our ambitious goal, Taylor announced that it would be the first national physicians' supplies company.
We decided to go after Taylor in its own backyard. Taylor was headquartered in Beaumont, Tex., and in 1991 we opened a branch in Houston. We put a salesman, Todd Modi, into Beaumont, 70 miles away. The one thing Taylor didn't have was same-day service. So that first day I told our Beaumont driver that I wanted to talk to him.
"Todd's out selling in Beaumont today," I said. "He might not call in an order, because he probably won't sell anything. But at 11 o'clock you are to drive this van to the city limits of Beaumont. Then you can turn around and drive back."
He looked at me. Then he said, "Sure, OK," and walked away. About 20 minutes later the local manager came up to me and said, "Pat, the driver says you told him to drive to Beaumont."
"That's right," I replied.
"But there's nothing to deliver! He thinks you're crazy."
I got the driver and the manager together and explained two lessons I wanted them never to forget. The first was simple but important. We wanted Todd, our salesman, to see that van going to Beaumont every day. He'd know it was his responsibility to fill it up.
The second lesson was even more important. That truck had to go to Beaumont every day, regardless of whether it was empty, because we never wanted to offer anything less than same-day service. Suppose we hadn't sent the truck? And suppose one day the only order in Beaumont was for a single package of thermometers? Any manager would ship the package overnight rather than put it in an empty truck. But right there, our competitive edge would evaporate. Suddenly, we'd be no different from Taylor or any other competitor.
Opening up a new territory and sending out trucks before our salespeople can fill them up costs a pile of money. Sending out an empty truck, of course, cost us another bundle: it was four days before Todd got even one order--and several more days before he got another one. At PSS we always say we've shipped a lot of air from our warehouses to doctors' offices.
No one pays for air, but customers do pay for a level of service they can't get anywhere else. PSS has made all the necessary investments, such as the laptops. We've also made the commitment symbolized by the empty truck. We've taught our people just how much a priority same-day service is--even at the cost of being thought a little nuts.
Thanks to that edge, we're doing pretty well. We have a branch in Beaumont that does $5 million a year. In 1995 we acquired Taylor Medical. And PSS was the first--and is now the only--national physicians' supplies company.
Patrick Kelly is founder and CEO of Physician Sales & Service, which is approaching $1 billion in annual revenues.