I started in the computer industry when screens were green and the web is what captured insects behind your $5,000 desktop PC. In 1989, I became the 17th employee at a start-up called Kingston Technology in California. When I left Kingston nine years later, the company had more than 700 employees and revenue in excess of $1 billion. Today — more than 20 years later — the company remains an industry leader.
Early on, I realized that I was in the middle of an extraordinary company and set out to learn as much as I could from the founders, John Tu and David Sun — true industry giants. There were many lessons, but one in particular stays with me today. Maybe it’s because it came as such a surprise:
At Kingston, the customer isn’t No. 1. In fact, the customer isn’t even No. 2. The customer is No. 3.
As John and Dave would explain, at Kingston the employee is No. 1 and the vendors are No. 2. At the same time, being third with this company was better than being first at any other. Here’s why.
Kingston focuses on computer memory, a commodity that can be differentiated mostly through service. And to provide extraordinary service, you need happy, motivated employees. Kingston was famous for employee perks: an ocean cruise to Mexico, a weekend gambling junket in Las Vegas, catered lunch on Fridays, free drinks and snacks, and competitive although not excessive, compensation. Just as importantly, if a customer was out of line with an employee, Kingston would do the right thing rather than the expedient thing. This produced a team of nearly fanatic employees providing customer service that was anything but third rate.
Customers aren’t happy when shipments are missed and lines go down as a result. As companies become increasingly virtualized and distributed, a well-functioning supply chain becomes a prerequisite for customer satisfaction, customer retention and even corporate survival. While a company can usually survive the loss of a major customer, the loss of a key vendor can often be fatal. Accordingly, Kingston would enter into long-term contracts with suppliers, often overpaying in a volatile commodity market. The company always paid on time and would even pay early at the mere request of a vendor short on cash. When negotiating, it was always important to “leave something on the table for the other guy.” The result was a reliable supply of products when competitors were often stocked out.
Today, my partners and I try to emulate Kingston’s philosophy and maybe even a small measure of their success. At Summit, drinks and snacks are always free — a small price to pay knowing that computer programs come as a direct result of ramen noodles and Mountain Dew. Our teammates schedule their work around their lives and families. They work from home when they want or need to, even in one case when home is a mobile command center (the biggest RV you’ve ever seen). We pay our vendors on time, prepay orders when we need to and always remember that it’s in our best interest to be a profitable account for our vendors. We ask favors only as a last resort.
Little things mean a lot. It seems that when times get tough, the first things to go are the perks that make a job more of a career than a chore. Ramen noodles and pop are an inexpensive way to let people know that they’re valued, particularly in difficult times.
The customer isn’t always right. So trying to satisfy customers at the expense of employee morale isn’t in their best long-term interests, or yours.
Treating vendors like commodities is so 20th century. With increasingly distributed business models, vendors are an extension of your company and every bit as vital to your customers’ satisfaction, and as a result, your success.
Ron Seide is the president of Summit Data Communications Inc., a wireless technology company headquartered in downtown Akron. Reach him at email@example.com.