Ask someone to name a great American company and you’ll likely hear “Google” or “Apple” – tech giants from Silicon Valley. You would most likely not hear a manufacturing company – we know those left U.S. shores long ago. And you would definitely not expect to hear a company located, of all places, in Detroit.
Not so fast.
Photo Credit: Shinola
Efforts to bring manufacturing back to the United States have intensified in the last few years, closing gaps in what it costs to manufacture at home. Organizations like The ReShoring Initiative have made noble attempts to help companies rethink sending manufacturing jobs offshore. We’re seeing progress. 60,000 manufacturing jobs were added in the U.S. in 2014. But can America restore its once hallowed greatness building iconic brands and manufacturing flagship products under those brands within our borders?
We can, and it’s being done in Detroit. Shinola, the historic shoe-polish brand, has reappeared with force. But instead of shoe polish, they are making fine watches. “A long tradition of quality watch-making has just begun in Detroit” boasts their advertisement. After five years, they are annually assembling more than 200,000 high-quality timepieces, in addition to bicycles, leather products, journals, and their newest category, audio. Their first limited edition time piece that launched their brand -- of which they made only 2500 – sold out in eight days. Their nine flagship stores sport beautiful designs, product displays, and places to get coffee with friends.
So exactly how does one go about building a manufacturing company in a category that is highly contested by the Swiss, in a trade whose skills haven’t been seen in the U.S. in decades, and in a city that has been blighted by severe economic depression? Jacques Panis, Shinola’s president, had these insights to offer any executive with aspirations for starting or scaling a great company. Today, plummeting employee engagement scores indicate big companies have become employers of last resort. Shinola could well be a blueprint for America’s next generation of iconic organization at which best-in-class talent lines up to work. Building such an organization is anything but easy. Entrepreneurs with aspirations to scale – pay close attention.
1. Be unrelenting about the purpose for which you create your company. Shinola founder Tom Kartsotis, (Fossil, Bedrock Manufacturing), was maniacally clear in his vision to start a company to create great jobs. Says Panis, “Of all the things we make, great American jobs may be the one we’re most proud of.” There’s a significant difference in setting out to make a watch company and setting out to build a manufacturing company that creates jobs and makes fine watches. “We weren’t entirely sure we could train people to make watches, but we were determined to try.” They chose Detroit because of its longstanding history of great design and manufacturing. (It’s one of UNESCO’s 22 cities in the world designated as design centers, and the only one in the U.S.) “Why not just accept that manufacturing is gone from America? Why not let the rust and weeds finish what they started and embrace the era of disposability?” These are questions leaders unwilling to push the boundaries of convention might ask. But at Shinola, they are answered daily in the way they build high quality products with pride, and hire and train employees. “We don't think American manufacturing ever failed for being too good. Our worst happened when we thought good was good enough. It's a tall order to return to form, but we're up for it. We’re starting with the reinvigoration of a storied American brand, and a storied American city. Because we believe in the beauty of industry and the glory of manufacturing.”
2. Put people first… second, third. “Take care of your people, and your people will take care of your customers and your business.” Panis says that was Tom’s mantra from the outset, and they live by it. Far from a cliché, Panis connects any company’s longevity to the care of the people who will go with you into the future. “Too many leaders focus on the business, not the people.” He points to the basic necessities of workers’ lives. “A comfortable break room. Clean rest rooms. Fair wages and benefits. Great communication so they know where we are going and how they fit into the story. A ‘high-five culture’ that ensures our people know we are grateful for them and their work is appreciated.” Shinola believes people’s ability to succeed is directly tied to how they are treated.
3. Be intentional about the culture you build. Shinola’s core values are embedded in everyday operations. Panis says “Our values have been forward-facing from the get-go.” Unlike many companies who put their values on screensavers, Shinola puts theirs into practice. Making high-quality products has translated into an industry-precedent lifetime warranty on their watches. Being transparent has translated into live streaming webcams inside their factory. Engaging the communities they serve means a daily practice of talking openly to people about their passion for creating jobs. “Our people are our greatest brand ambassadors. When communities see the opportunity, enjoy a meal with us, it creates a bond that makes them want to tell our story and be part of it.”
4. Make scaling everyday work. One of the most common causes of startups’ demise is ineffective scale up. I frequently walk into $200 million companies trapped in the bodies of $30 million organizations. This is the result of aggressive top line growth at the expense of investments to scale critical capabilities. People, machinery, departments, get bolted onto existing operations as though “more of the same” means scaling. Margins plummet, entrepreneurs panic and make poor tradeoffs. Given that scaling is a stated intention of Shinola, they are thoughtful about how they do it. “Scaling starts with leadership at the top of the organization. Tom has an incredible track record building leaders, brands, and organizations. Our leaders have deep knowledge and hands-on backgrounds that allow them to make quality decisions about growth. We step back every day and look at our business and processes, our need to automate. It’s ongoing innovation. You don’t go from Quick Books to a broad ERP overnight. We are always looking at the right organizational hardware so that systems support people, not eradicate them. The homework our leadership team has to do to know what changes are needed when is vital to the implementation of those systems so that we scale efficiently and effectively.”
5. Build learning into the organization. Panis reflects, “Our biggest risk was whether or not we could train people in the precision work of making fine time pieces. We partnered with the Swiss. Adapting their culture was a challenge. The metrics, methodologies, quality and efficiency standards required intense learning for people who’d never made a watch before.” To sustain Shinola’s bold growth rates demands dedication to ongoing learning. Beyond training, embedding insatiable curiosity strengthens peoples’ motivation to learn. “The hunger for ongoing learning is driven through ongoing innovation. We have to continually innovate, bring new products and categories to market, create amazing world class experiences with our e-com platform and in our stores; we have to push the envelope at every level of this brand and be the best we can be. People wonder, ‘What is next? How are we going to get there?’ People want to learn because they want to get better. They want to be part of “next” to learn their way into bigger opportunities.”
6. Protect time to lead well. No entrepreneur escapes the daunting challenges of scaling personal leadership . The demands from increasing numbers of stakeholders put tremendous pressure on limited hours. Panis says, “I have to make time to lead well. I have to spend time with product development, marketing, Company founder, Tom Kartsotis, our employees in the manufacturing operations. I have to keep the culture solid and make sure we’re achieving our goals. I may or may not spend my days as perfectly aligned to what I wish I was spending time on, but I’m always doing things important enough to do.” Interestingly, no Shinola executives have assistants. “It’s a cultural thing. We’re big boys and girls and we should manage our own calendars and priorities.”
Unquestionably, the tensions from required tradeoffs between quality, margins, and people will only intensify with growth. Shinola’s strong foundation and values will get tested. Like any thriving organization, they will face that razor-fine line between “adapting” and “compromise.” All indicators suggest they are up to the task, and for the sake of having a great example to follow, let’s hope so. They are aiming high. “We are creating a community that will thrive through excellence of craft and pride of work. Where we will reclaim the making of things that are made well. And define American luxury through American quality.”
