Every company has its baby photos. Monoprice Inc. is no exception.
A decade ago, the Internet electronics retailer was a small start-up. The company’s owners wore many hats, dictating almost every aspect of the company’s culture, strategy, systems and processes.
That was then. The “now” for Monoprice is the company that CEO Ajay Kumar has fronted for the last two years. It’s a $121 million player in its space, growing at a rate of 25 to 30 percent every year. With rapid growth and a workforce of 250, Kumar can’t possibly dictate every angle and nuance of the company’s day-to-day operations.
“When you start a small company and grow it, you can manage every aspect of it,” Kumar says. “You can be hands-on, making every decision, involving yourself in every detail.
“But now, we have to have all the appropriate controls in place to manage the company. We have to have the right organization, accountability, reports, metrics, all that stuff, so that it’s not just the top person running the whole thing. You need the structure and controls in place to make it all work.”
By the time Kumar took over, the CEO’s role had evolved into a global-view position. Instead of laboring in the trenches, Monoprice needed its CEO to define a vision, work with his leadership team to put goals and processes in place to achieve the vision, create metrics to measure progress against the goals, and build a team that could achieve and exceed the goals.
“My leadership style is that I am hands-on but not a micromanager,” Kumar says. “I want people who are capable of executing what I need done in each functional area. In addition to the goals and metrics, we need the right people in the right places throughout the organization.”
At its heart, Kumar’s biggest challenge has been to harness the ability to look ahead and anticipate what his company will need in the coming years.
Create a vision
Vision equals direction. Without a well-defined vision, a company is operating without a compass or a rudder. That’s a recipe for turning growth into stagnation and eventually into mere survival.
That’s why Kumar’s first job upon taking the CEO’s role was to define a vision and ensure that the vision and the reasoning behind it could be adequately explained to the Monoprice team.
“I was able to have a vision for the company coming in, since I had a lot of experience in this industry,” Kumar says. “I had a lot of experience in terms of sourcing products from Asia, getting products made rapidly. The consumer electronics business is something I’ve been in for a long time, so I had a good idea of what the vision needed to be for the type of company we are.”
Kumar’s vision was to produce products equal to or better than big-name brands in terms of quality and compete on price.
“We didn’t want to get into selling any product line if we didn’t feel we could generate at least a 30 to 70 percent advantage over the retail selling price,” he says. “That creates a certain amount of discipline as far as launching products. We don’t want to be randomly launching products.
“We want to launch products where we have a price advantage. The way we do that is we don’t sell other brands. A lot of Internet retailers are selling other brands. We don’t do that, so we are eliminating a whole layer of markup.”
By not carrying outside brands, Kumar and his team also attempted to make a statement about their belief in the quality of their products — a move made, in part, to bolster consumer confidence in the product lines.
“If we sell other brands, we’re, in effect, saying their brands are as good as ours, but they are much pricier, so why are we selling them?” Kumar says. “It’s like saying their products are a step up from ours. That is a key part of our vision: The products we make need to be as good as the famous brands. If the quality is the same but the price is lower, people aren’t going to go anywhere else.”
Related to that, Kumar incorporated a sense of focus into the vision. Monoprice would compete on price and quality but would also compete by becoming an expert retailer in a focused space, as opposed to carrying a broad spectrum of seemingly unrelated offerings.
“A lot of Internet retailers carry tons and tons of products that all seem kind of random,” he says. “It doesn’t feel like a portfolio.
“Our goal is to pick product lines that we want to be in. If we want to be in the Apple accessory area, we need to come up with the right mix of products in the portfolio. Not too many, not too few, because our goal is to become a destination for each product line that we want to be in.”
With the vision focused on those three factors, Kumar then had to roll it out to the company at large — complete with a compelling set of processes and incentives aimed at motivating people throughout the company.
Make them follow
To drive the entire company toward realization of the vision, Kumar had to give all 250 people a reason to get on board. He had to show everyone in the company how their performance related to the company’s ability to achieve its overarching goals and turn the vision into something concrete.
Kumar and his leadership team started by rolling out the vision with a companywide presentation, with an opportunity for dialogue and feedback. That planted the seed, but Kumar says the seed sprouted thanks, in large part, to the company’s bonus plan.
With a bonus plan anchored in corporate-level metrics, Kumar steered every person in the organization, regardless of department, toward the goals that would help Monoprice realize his vision.
“I think a bonus program is always tricky,” Kumar says. “Do you measure people based on department results or overall company results? Some companies go down one path and some go down the other.
“Early on, I decided our path should be aligned along one set of metrics at the corporate level. We decided to focus everyone on three metrics that drive our bonus program: sales, profit and cash flow. Some people in some functions might not be able to directly impact all three of those, but we wanted everyone thinking about all three.
“The thing I like about having the metrics at the corporate level is that everyone in the company is focused on the same thing. It’s the same bonus program whether you are a warehouse worker, customer service person, IT or even myself. It keeps everyone working in the same direction.”
The disadvantage to developing a bonus plan driven by corporate-level metrics is that some people in certain areas of the company might not feel a high level of urgency to meet the company’s goals.
To avoid coasting, Kumar and his team have devised department-level metrics. Since those metrics don’t directly impact the bonus program, Kumar relies on a culture of accountability to enforce them.
“They’re producing against those department-level metrics, they’re showing plan versus actual against those metrics, so there is a little bit of accountability and professionalism at stake when you’re executing on that plan in front of your peers,” Kumar says. “That, in and of itself, will drive a certain level of motivation.”
Find the talent
You can have a well-defined vision, and you can develop metrics and incentives that ensure people are working toward realizing that vision. But your people provide the momentum that will really power your company toward the goals you have set. Without competent employees, nothing gets done.
Kumar believes in attracting top-notch talent but not without first understanding the roles that he needs to fill. He wants talent, but he doesn’t want to simply stockpile talent for talent’s sake, without a plan for utilizing it.
“One of the key things before you go recruit people is making sure you have an understanding of what, exactly, you want from a particular role,” Kumar says. “Some folks may go out there and hire a generic person for a generic role. What I try to do is figure out exactly what I want to get from a particular role.”
Then, when you bring a candidate to the office for an interview, make sure your line of questioning aims to ascertain whether the candidate is a match for the criteria you have established.
“One of the things I like to do is get into the details of what they did at their past job and how they did it,” Kumar says. “When you look at resumes, sometimes it will say a person saved 30 percent or grew sales by $50 million, but you start digging, and they didn’t do it all themselves. They didn’t drive it. I’m looking for people who generated benefits at their previous jobs, and I want to know if they can do the same thing at this company.”
How to reach: Monoprice Inc., (877) 271-2592 or www.monoprice.com
The Kumar file
Name: Ajay Kumar
Company: Monoprice Inc.
What is the best business lesson you’ve learned?
I am a big believer that what you don’t work on is as important as what you do work on. It’s important to know when you should pass on an opportunity. In most companies, it is too easy to get bogged down on doing too many things. It is the nature of a high-performance person. You want to get things done, but you can’t do everything.
What traits or skills are essential for a business leader?
Having a vision that makes sense, creating a sense of buy-in, recruiting the right people, drive, performance, being a good two-way communicator, facilitating teamwork, and providing a coaching and mentoring approach to growth. One of the primary things people want to get out of a job is what they learn from their boss.
What is your definition of success?
For me, it is setting goals and then achieving them. That might seem very metrics-oriented, but if you don’t achieve goals, it won’t be a fun place to work. People won’t feel like the company is successful. If you set goals and don’t make them happen, you don’t get that sense of accomplishment. People start to feel like you’re wishy-washy.
Develop a strong vision.
Create buy-in on the vision.
Hire the right people.