Fred Potthoff keeps Kroff Chemical Co. innovative Featured

2:45pm EDT February 28, 2011
Fred Potthoff, Co-Owner and President, Kroff Chemical Co. Fred Potthoff, Co-Owner and President, Kroff Chemical Co.

If you are looking for the employees of Kroff Inc., you might find them racing go karts or setting up an ambush to blast Co-Owner and President Fred Potthoff with paintballs. You also might find them creating innovative solutions that lead to profitable new divisions within the company.

For Potthoff, the extracurricular activities are an important part of how innovation gets done at Kroff, a $40 million company that provides water treatment chemicals and solutions to industry.

“We do a lot of things as a company to get closer to the employees,” says Potthoff. “There is a lot of interaction between [senior management] and everyone else in the company.”

Besides the obvious enjoyment of shooting co-workers with exploding paint pellets or putting your boss into the wall on turn four, the outings help everyone get to know their co-workers and managers a little better. This familiarity also helps break down the barriers when it comes to presenting new ideas. If a lower level employee has what he or she thinks is an innovative idea, it’s more likely to be shared if there’s an established comfort level with the people that will be looking at it.

Even the presentation of potentially monumental ideas comes in a somewhat informal setting – the standard managers’ meeting. Because the sales reps are comfortable with their managers, the usual process is the sales reps share their ideas with their manager, who in turn, presents it at the managers’ meeting.

The results of this process are impressive: Six differentcompanies have been created at Kroff, and the idea for each one came from an entrepreneurial employee.

“It starts with hiring the right people,” says Potthoff. “You let them come up with good ideas and then sometimes you take a risk financially.”

When Potthoff is looking at finding his next entrepreneurial employee, there are two key things he focuses on: competence and motivation.

“Motivation is the most important, and has about a 70 or 80 percent chance of predicting success, but also is the most difficult to determine,” he says. “You can make sure someone has the right degree and look at who they worked for and who they were trained by, and that’s one indicator of success. But if someone has that drive, they will work to get close to the customer to come up with something innovative. It’s a behavioral thing. You have to dig into their past and look at projects they were involved in that were successful.”

Once you have entrepreneurial people, you need to do your part to make things happen.

“The first thing is to put ego aside,” says Potthoff. “One of the things that used to drive me crazy at other organizations is that there was too much top-down management. Some senior manager decided the company needed to be in market X, would fill out the forms and make the call, but no one would actually come out to the field to see if it was a good idea or if we could make it work. If you are hiring talented people, you have to listen to them.

“Secondly, you have to be willing to take action and some risks. It’s one thing to listen to great ideas, but if you don’t act, employees will say, ‘Why bother?’ You have to be willing to act on something when there looks to be an opportunity.”

With risk, comes reward – for everyone

Innovation is a balancing act of risk and reward. The bigger the risk, the bigger the reward. Fred Potthoff, co-owner and president of Kroff Inc. says that it’s necessary to take risks in the market to be successful.

Thanks to Kroff’s culture that’s focused on making everyone an entrepreneur, there are a lot of good ideas that come from the employees who are closest to the market.

An employee takes a bit of reputation risk whenever he or she brings an idea forward, so there needs to be a reward for successful ideas. At Kroff, if someone comes up with a great idea, the company will form a new division around that idea and the person who brought it up gets to be in charge – essentially an instant promotion to general manager.

If you have hired entrepreneurial types, they’ll work hard at the lower levels to find that next great idea for you, knowing that they too will be rewarded with more responsibility. Combine that with an incentive-driven pay plan, and you have a recipe for a company where management benefits from a constant flow of revenue-generating proposals from ultra-motivated people that know the markets the best.

How to reach: Kroff Inc., or (800) 466-3066