Unbreakable Featured

8:00pm EDT October 24, 2006
 Joel Moskowitz and some partners and investors sat around his kitchen table in 1967 and kicked around the idea of starting a company. They had $5,000 —Moskowitz’s wife’s savings — lots of youthful exuberance and a conviction that an emerging ceramics technology could be the basis of a successful business.

“It wasn’t clear what our products were,” says Moskowitz, chairman, president and CEO of Ceradyne Inc. “Nothing was very clear except for this idea that we were going to make advanced technical, primarily nonoxide, ceramics. One of these materials, boron carbide, is the lightest, hardest material known to man, and it stops bullets, but at that time, that was just a research phenomenon.”

Moskowitz turned that technology into a business that now makes armor, products for use in the energy industry, internal parts for diesel engines and bearing parts for windmills.

The company hit $1 million in revenue 1976 and grew slowly but steadily, hitting the $25 million mark in 1987. But its volcanic growth spurt began in the current decade, with an eightfold growth in revenue from 2001 to 2005. In fiscal 2005, the company posted $368 million in sales, and Moskowitz says that this year, Ceradyne should pass the $600 million revenue mark.

Here are some of Moskowitz’s secrets to success.

Lead by example
Moskowitz says his belief in the promise of the technology helped to sustain him and the company through its darker times, although often at the cost of personal and financial sacrifices.

“In the early days, there were difficult times, and I was really 100 percent dedicated to Ceradyne, sometimes at the sacrifice of myself and my family,” says Moskowitz. “That means there were many times I didn’t take a salary. There were times I borrowed money to give to the company, and as recently as the early ’90s, I loaned the company money to get through a tough short period of time.”

But Moskowitz is convinced that his commitment to the company was persuasive enough to keep some key people on board, people who might have otherwise jumped a listing ship.

“People saw what I was doing and felt that there was something to it and stuck with the company in the rough times,” Moskowitz says.

Leading by example is the first step, but you still have to recognize the contributions of others.

“I believe other people’s commitment is predicated on setting the right example, rewarding performance in a clear and timely manner, and providing nonmonetary recognition,” he says. “At Ceradyne, I have tried to set a good example as it relates to dedication to the company as demonstrated by a good work ethic and open management style.”

Ceradyne employees are rewarded quarterly with cash bonuses based on after-tax earnings. Additionally, many of the senior managers and executives have been granted incentive stock options. The company also gives nonmonetary awards for employee of the month and perfect attendance recognition.

Get personally involved
Moskowitz continues to take an entrepreneurial, hands-on approach to the business and looks for the same kind of spirit in the people he brings into the company.

“I guess I am always looking for people that have at least some of the values that I feel helped me build the company to one of the strongest growth companies in America,” says Moskowitz. “This usually means an entrepreneurial-fueled drive that may be considered from the old school, but I still believe is necessary.”

But unlike some entrepreneurs, he doesn’t believe in micromanaging — in most cases — and has delegated responsibility out into the organization.

“Micromanagement can drive those who are micromanaged crazy,” says Moskowitz. “However, in a well-defined, very specific area, if you’re the best, then go ahead and micromanage; it’s probably in the best interests of the company.”

Where Moskowitz is most hands-on is at the marketing end of the business, where he says his technical expertise and knowledge have been critical to Ceradyne’s success. It not only convinced him of the value of the technology and fueled his persistence, it also gave him the wherewithal to convince his customers of its worth. CEOs, he says, add significant value to their organizations when they can be at the head of that effort.

“I’m really a ceramic engineer,” says Moskowitz. “I think that’s important. I really know what we make. I like to do marketing, and now I deal at very high levels, both within the U.S. government and in the private sector.”

While it’s not unusual to find CEOs at smaller companies closely involved with customers, Moskowitz finds it every bit as important for him to be at the front of the marketing effort today as it was when Ceradyne was a $20 million company.

“I’m going to have a meeting with the CEO of one of the largest corporations in America in two weeks,” says Moskowitz. “In that meeting will be the vice president of research and development for this giant $23 billion company. And what we’re going to be talking about is not only the relationship between Ceradyne and this other company, but why there has to be a relationship, and the only reason why has to do with our technology.

“And when we get into that conversation, I’m not going to say, ‘I’m going to bring in Dr. so-and-so who’s going to explain it.’ I’m going to explain it. And at this high level, I know it will be effective. That’s not in 1990, that’s in 2006.”

Find help
Still, Moskowitz acknowledges that micromanagement has its limits, usually in proportion to a manager’s abilities.

“You just can’t be that smart, have excess energy to burn and know everything,” he says.

Moskowitz says the challenge in a large, rapidly growing organization is to make sure new positions are added so that they coincide with the expanding responsibilities that develop as the company grows.

“At some point, say $100 million in sales, your personal zeal may not be enough,” says Moskowitz. “It’s time for organization, structure and a few more top executives to join you at the top. It often becomes obvious when it is necessary to delegate additional responsibility and authority.

“The first indication is simply one of growth, where you or your current staff just simply do not have the time to do the job. Of course, this is obvious. However, I find that people often will continue to take on responsibilities when there really should be additional delegation.”

And while he values a well-conceived organizational chart, Moskowitz says the true strength of a company resides in the talent, character and will of its human resources.

Says Moskowitz: “If you don’t have the right people, you don’t have a company. I know that in this day and age, it’s very in to say if you have a certain structure and you have the right procedures, that a lot of people can fill various roles. I believe there are people who have a certain zip, a certain level of intelligence, a certain work ethic, a certain level of integrity, and they become everything.”

Moskowitz says that finding the right people is, at best, an inexact science.

“I believe that there is almost no perfect way to select new key employees,” he says. “Therefore, the most effective manner of filling open positions is from within, if possible. Sometimes it is necessary to recruit from outside the company. I personally have had successes and failures using search firms, recommendations from colleagues, or even open solicitations.”

Moskowitz is wary of references, advising CEOs to do their own investigations of candidates, particularly for top positions.

“Often, references offer meaningless praise,” he says. “The only path that has a higher success rate is to do it yourself. Check out references yourself, interview candidates yourself, and the higher the level, the more your personal involvement.”

How to reach: Ceradyne Inc., www.ceradyne.com