Written by: Barry Raber, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
When I first met Mike, I was impressed by his bright-eyed enthusiasm. When he gave me a tour of his company, I had two immediate thoughts. The first was, “Man, this place is dead.” There was little activity, few people, and no energy. Half the building was mothballed with old equipment, empty desks, and the lights off. On the other hand, the field of business they were in was wildly intriguing with what seemed like endless possibilities. The company, DWFritz, was founded by his father 26 years prior to create machines for high-speed, high precision, advanced manufacturing.
Mike worked at Nike for 11 years out of college. He was successful there, but wondered how far that could go. He decided to get his MBA, and his parents persuaded him to take a turn working with their company. After five years, he had an opportunity to buy into company ownership, and in another five years had worked his way into the CEO role. This is where I met him, as he joined Entrepreneurs’ Organization and came into my eight-person EO Forum group. Meeting monthly and sharing business experiences with each other, I had a front row seat to watch Mike really get to work. And it was something to see!
Our group did not know how to react to Mike’s endless shares of improvements and sales purchase orders. In the beginning, none of us had heard of any of the companies they created machines for but his customer list soon evolved to include some of the world’s most-known companies. We started to call his results “Fritztastic” — a whole other level of fantastic. Over 10 years, Mike implemented ideas and grew annual company revenue from $10 million to $100 million, a full 10x. The company went from unknown to world-class and highly sought-after in his industry.
Mike and his father then sold the company to a large strategic buyer and retired at 55. I asked Mike what the secrets were for how he did that. Here’s what he shared:
Know your niche family business, where you are one of the best in the world
In any established business, you are likely doing a lot of things for a lot of customers. Analyze every line, product, and service and ask, “Are we the best in the world at this? Or close enough to become that? Can we add more value than anyone else to the customer?”
Pro tip: Focus like a laser on your differentiator. This is truly worth pinpointing. Once found, you have little competition and sales are easy — it becomes more like taking orders than sales, really.
Find and secure an anchor client
“If you could have any client in the world, who would it be, and why? What client could 5x or 10x your business? What would it take to get them, even just to get a foot in the door?”
Pro tip: Look for up-and-coming giants, that is, companies that will be much bigger in 3, 5 or 7 years. Once they get giant, everyone wants them, and they are hard to get. Mike used Wayne Gretzky’s quote as an analogy for this strategy: “Skate to where the puck is going.”
Have a one-page strategic plan, and make sure everyone knows it
Once you have some good ideas from these first two strategies, it’s time to dream a little. If you were the best at something, sales came easy, and you had large sales possibilities identified, where would you take this thing? Mike used examples from other Portland EO members, ultimately inspired by Verne Harnish, Gazelles, and the Scaling Up books, to create a one-page strategic plan for the next three years.
He set a Big Hairy Audacious Goal (a Jim Collins concept) of growing to $100M in revenue and becoming known as a world-class manufacturer in high-speed automation. (A BHAG is generally a 10-year time horizon.) Mike says making the plan was one thing but the critical part was making sure everyone was familiar with, committed to, and working on the plan non-stop.
Pro tip: Don’t be afraid to abandon a plan, goal, or initiative if you are getting diminishing returns and can pivot to something else with 5x to 10 x returns.
Bonus pro tip: Say “no” to most things. The trick for executing a plan is to not spread the team too thin trying to do too much at once. It’s kind of an art, but sticking to no more than three or four initiatives in each of the company’s main areas is key — never five and, ideally, some areas only have two. At any given time there is always an area that needs the most work and one that needs the least. Choosing not to do most things was key to maintaining the focus that brought success. Just say no!
Hire A players, fire C players
Once you decide to be the best at something, it can’t be done without A Players. Mike found an A Player in-house recruiter and set about stacking his leadership team with A Players to achieve the vision. A Players like to work with A Players, so the leadership attracted likeminded people. In his field, he needed “extreme credibility,” which requires A Players for sure.
As for C Players: “In my experience, managers are usually too slow to fire C Players. They make excuses about how it’s too much work, or that they will leave a hole,” Mike says. “With B Players, do give them a chance to improve and see if they respond to coaching. But C Players are not worth the time. They can impact so much in a business from a culture standpoint. Coworkers don’t want to work with C Players because they recognize subpar work, and they definitely don’t want to cover for them. C Players can also be a cancer, complaining about co-workers, management, and company direction."
Pro tip: “My experience is that it’s better to fire C Players and deal with a ‘hole’ than to coddle, coach, or spend the time and effort to get them to B-Player status. It also shows everyone else that C Players aren’t tolerated and that management is aware. Admit you made a bad hire, fire them, and go find an A Player. It’s much better for everyone.”
When Mike started his journey, there were 19 employees in small building in Tualatin, Oregon. When he was done, there were 525 people in Oregon, France, and China.
I have seen a lot of success in my 30 years in business, but I have never seen a success trajectory like the one Mike mounted. That is why fantastic doesn’t do him justice – it was Fritztastic! This is a stellar example of setting a 10-year BHAG and achieving it.
If there was any doubt about whether a second-generation leader can be successful with a family business, Mike blew it completely out of the water.
While Mike’s four secrets were applied to an existing family business, if these were applied in the same enthusiastic, disciplined, and focused way on any business, a 10-year, 10x is within your sites.
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Barry Raber, Executive Contributor Brainz Magazine
Barry Raber is a serial entrepreneur, president of Carefree RV Storage, a 22-year member of the Entrepreneurs' Organization (EO), the founder of Business Property Trust, and an EO Portland Entrepreneur of the Year. He shares his successful business secrets at Real Simple Business.
