What defines a great company? For one thing, troublemaking employees are tolerated even when they disobey the boss.
One of the quintessential breakthrough companies that Keith R. McFarland writes about is Polaris (NYSE:PII), a manufacturer of snowmobiles, motorcycles, and all-terrain vehicles based in Medina, Minnesota. The turning point in the company's life came early in the 1980s, when a senior engineer took on the CEO, Hall Wendell Jr., over strategy.
Here's how McFarland tells the story: "In the 1980s, the good news was that Polaris was one of only four surviving manufacturers of snowmobiles in the U.S. The bad news was that even though it had survived, the business was dead last in terms of quality rankings. And at this point, an employee named Chuck Baxter came to Hall Wendell Jr. and said he thought Polaris should make ATVs.
"Wendell thought this was crazy. The company didn't have any money to invest in a new product line. And if it started making ATVs, Polaris would find itself in a new industry that was absolutely dominated by Japanese manufacturers. At the time, everything you read told you that the Japanese model worked and was the way of the future.
"But Chuck wouldn't take no for an answer. He set up shop in a garage that was out in back of Polaris's manufacturing plant and started to make ATVs--basically taking the existing snowmobile design and putting it on four wheels. Wendell thought Chuck was a real pain in the neck, but he didn't stop him. And then a government report came out that showed that existing ATVs--which were three wheelers--were extremely dangerous. So it turned out that Polaris's four-wheel design was actually much better than the Japanese models' in terms of safety. The company got into the market and very quickly became a leading manufacturer of ATVs. If Wendell had shut down Chuck's garage project--and a lot of CEOs would have--then Polaris never would have been able to seize that opportunity. It might still be the fourth-place company in a field of four."
Correction: The original version of this story misstated the cities in Minnesota in which two companies have headquarters. Polaris has headquarters in Medina and has operations in Roseau, while Fastenal is based in Winona.