Why people still matter Featured

9:36am EDT July 22, 2002

In the tradition of this New Economy, Pittsburgh-based Cable Design Technologies (NYSE:CDT) leads an aggressive but quiet charge.

The company, with 27 manufacturing branches throughout the world, has grown into a leading producer of the very infrastructure that allows the Internet world to communicate. Gigabit connectors and cable, riser cables, coaxial backplane applications, active and passive fiber optic components -- all of this aptly describes what CDT represents as it supplies the global connectivity for this New Economy.

But it really doesn't describe how the company has evolved from traditional Old Economy wire and cable manufacturing to a highly profitable New Economy conglomerate generating almost a billion dollars a year in total revenue.

To answer that question, you'll have to forget about the New Economy for a moment. And forget about the new technologies that the company continues to develop or acquire. And even forget about the fact that, while Internet and other high-tech companies will come and go, any company moving forward will need the kind of cable and wire infrastructures that CDT provides.

The answer doesn't lie so much in the innovation or global manufacturing capabilities, though both are important. Rather, it can be found in the business philosophy of the company's commanding leader, Paul Olson, who has been running the firm and its estimated 5,000 employees since its inception in 1985.

Call him old-fashioned or even Old Economy, but Olson's business philosophy is fundamentally simple and as old as commerce itself. He believes that people relationships still matter.

"We've created a culture where creativity is valued and entrepreneurship is encouraged," Olson wrote in a recent capabilities booklet. "We acknowledge that individual effort makes a difference -- a difference to our customers, our shareholders and to our future growth."

That doesn't make him a pushover, though. Olson, in his mid-60s, is a large man with big hands, a serious handshake and the demeanor and posture of a proud general. In fact, it may be no coincidence that one of his all-time heroes is U.S. Army General George Patton Jr.

"He was a leader who was on the front lines with all of the people who were getting shot at," Olson says with admiration. "He was the soldiers' general. He was a great leader."

But talk to this 40-plus-year veteran of the cable and wire manufacturing industry, and his seemingly gruff exterior turns to a humble, almost unbridled passion and enthusiasm for the business and the armies of people helping him build it.

"That's just Paul's style and personality," says Michael Steinberg, a research analyst with Emerald Research in Pittsburgh, which follows CDT's performance. "He's very enthusiastic about what he does. When I first met him, I expected to see someone who was burned out, unaccepting of change. But I think he's more passionate about the business than he ever was."

As a result of that continued drive and people-driven enthusiasm, Steinberg says, "The company has been executing on all cylinders as far as business strategy goes."

Last year, CDT generated about $684 million in revenue, with a net income (before nonrecurring charges) of almost $43 million. With help from new acquisitions, Olson hopes to reach $1 billion in total revenue within a year, as long as the company hits its growth goals.

That record was enough to convince Elliott Schlang, a research analyst with Cleveland-based LJR Great Lakes Review, to issue a strong buy signal earlier this year for investors considering CDT for their portfolios.

"It's their record -- compounding 18 percent a year for the last five years in earnings per share -- and their ability in integrating acquisitions without a ripple," Schlang says of what has attracted him to the company.

As a relatively new follower of CDT, Schlang says he isn't familiar with Olson's management style and business philosophy, but adds, "You don't compile a consistent high-growth record while treating people badly."

Ball players

That growth, Olson explains, comes from a philosophy that each employee is an active participant in that growth, with each being recognized for both group and individual effort and excellence.

"In the culture of our company, we have a very fluid organizational chart," Olson says. "We have lots of people with lots of titles. But they're people who grab the ball and run, you know, 'Give me the ball and let me play.'

"I hope I'm the visionary," he continues. "I establish the parameters, but then I hope they play ball. I'm trying to make one gigantic team work together and, at the same time, let the individuals shine."

Olson describes his role as one of orchestra conductor.

"I'm like a conductor in the symphony, who may request a little more noise on the bassoons and less on the drums."

He acknowledges that approach becomes more difficult as the company grows, but he's not about to turn his employees -- any of them -- into faceless numbers that simply do what they're told.

"People don't want to go to work and have someone telling them what to do," Olson declares. "Companies will do well if they let people run with the ball."

Avoiding history

Olson began his cable and wire manufacturing career in sales at General Cable in New York City in 1959 after graduating from Hobart College in upstate New York. Eventually, he made his way to corporate giant General Electric Corp.

That's where he got his first taste of the large, rather impersonal, corporate mentality. As he tells it, he managed to build up a large territory of customers in hopes of impressing the company enough to climb the corporate ranks quickly.

"I wanted to create something -- I wanted to be a winner and have fun doing it," he says of the experience.

The reality, however, was less than inspiring, he laments. Olson says the company continually changed the standard of success as employees were about to reach the previous standard.

"You never seemed to get to the next level," he says. "Finally, I got frustrated with it and said, 'The hell with it. How do you ever get ahead in this company? I'm going to be here forever.' So I left."

To this day, he maintains a bittersweet impression of that impersonal corporate mentality.

"I hated working for big corporations," he says. "It's confining, constricting."

That frustration served as the foundation for the philosophy that has helped Olson turn CDT into a connectivity infrastructure powerhouse. In 1985, he decided to venture into the business himself via the formation of an investment group to acquire a Massachusetts-based cable and wire manufacturing company.

At the same time, another investment group had just purchased West Penn Wire in Washington, Pa., and decided to go after the Massachusetts company, as well. That group hired Olson to run the entire company, which then acquired the Massachusetts firm. Olson was off and running.

Today, he not only continues to grow the company, he also owns more than 600,000 shares outright, along with about 400,000 stock options. At press time, the stock was trading at around $25 a share following a stock split.

Mini-entrepreneurs

The premise of the lesson Olson learned from his large corporation experience? "Don't ever build a company that gets so restrictive that your employees lose a sense of where the company is going. That's how you lose your identification and become part of the mob mentality." He calls such people "automatons."

Says Olson: "If I start telling people how to run their company, I lose their creativity."

Olson says he has built his company by hiring "competitive self-starters" or acquiring them as part of his extensive industry consolidation strategy.

"I treat people like I wanted to be treated myself," Olson says. "And I certainly wanted to be listened to. I want competitive self-starters who can sell their ideas to the rest of the company."

He says active participation in the growth process makes his employees better satisfied with what they do.

"They're happy, and if they're happy, they're working," he says.

Olson says he not only pays higher wages than industry averages to attract top management talent, he also grants employees stock options, with all managers on a bonus/incentive compensation program. Fifty percent of their compensation, he says, is determined by the success of the company overall; the other 50 percent is determined by the success of the manager's individual division.

Success, Olson adds, is based on bottom-line operating profit.

The importance of relationships

Olson doesn't confine his people-first business philosophy to his employees. In some ways, he harbors a disdain for voice mail, e-mail, the Internet and anything else that potentially cuts out the interaction between real people in the industry.

For him, relationships -- which can take years to cultivate with trust and integrity -- come first, even in the New Economy.

"People buy from people," Olson says.

Jane Strauss, director of public relations for CDT, describes that statement as one of many "Olsonisms" which have become well known within the walls of CDT.

Says Olson: "Can you think of the horror of not being able to meet with people? People don't go to malls to buy things. They go to interact with other people. For us, it isn't just about buying a product from a supplier. It's about buying from a supplier you have confidence in.

"There's always a low bidder, always a guy who will give it away for nothing."

Emerald Research's Steinberg says he's quite impressed with Olson's relationship-building ability.

"He's very good with relationships," he says. "He has quite a network. You won't find too many CEOs in the same business for 40 years. You absolutely need contacts and networking to stay alive in this business."

Olson, in spite of so-called New Economy paradigms and aggressive technology company strategies that put speed to market before all else, says he will stick with his people strategy as he aims for the billion-dollar mark and beyond for CDT.

"It's holding the individual higher in the company than other companies do," Olson says. "It's the individual contribution [to the team.] If it stops, what is there after that?" How to reach: Cable Design Technologies, (412) 937-2300; Emerald Research, (412) 338-0852; LJR Great Lakes Review, (216) 621-1330

Daniel Bates (dbates@sbnnet.com) is editor of SBN Pittsburgh.


Paul Olson's "Olsonisms"

Cable Design Technologies Inc. President and CEO Paul Olson may not fancy himself a business philosopher, but he has become known for what other employees call his "Olsonisms." Combined, they make up a rather well-rounded philosophy for growing a large company.

And, if the company's performance is any indication, the philosophy is a sound one. Consider the following:

  • "Business is very much like war. You have to have fine communications, be on time and take initiative. After you do all of these things, you have to have luck."

  • "If you're not making mistakes, then you're not working. There are no .500 hitters in our company."

  • "If you can't do it, don't say it; if you say it, then make it happen."

  • "People buy from people."

  • "We don't have any kings or princes in this company."

  • "You treat people like you want to be treated yourself. And I certainly wanted to be listened to."