Jack Ouellette knows that he is fortunate to be in charge of a company with rich history and he takes pride in celebrating that fact. In 2010, American Textile Co. celebrated 85 years of business. The company made a day out of it. Employees at the Pittsburgh facility brought their families and they enjoyed food, costumes and false store fronts that would have been in vogue in 1925. While celebrating where you came from is certainly important, looking forward is critical, as well. Ouellette, CEO of the 325-employee company, knows that he has to keep his eye on the future in order to stay in business for another 85 years and beyond.
In 2005, Ouellette saw that the company was becoming too one-dimensional. So he did what any CEO would do: He looked for ways to expand the business and break out of a stagnant slump by focusing on the company’s core competencies.
“We have intentionally been looking to grow the business,” Ouellette says. “We did that by looking around and asking ourselves, ‘What products are similar to the ones that we currently are involved in?’ It’s using all of the same skills that we have in basic mattress covers and pillow covers to make these items. We felt that there was a tremendous tie-in and a high correlation between those items and sleeping pillows.”
Here’s how Ouellette expanded into a new market by utilizing existing competencies and more than tripled revenue between 2007 and today.
Do the research
Making the decision to create a new product or enter a new market can make or break you. It can’t be taken lightly or done too quickly before knowing how and if you can do it.
“You have to make certain that you’re doing your homework upfront,” Ouellette says. “When we were first trying to determine what products we wanted to expand into, we checked with our customers to find out if some of the items we were looking at would have enough room for a new supplier. When we went to the retailers and said we’re interested in getting into the pillow business, they welcomed that idea. They said the industry does need another supplier.”
In American Textile’s case, the company had good products and an audience buying them. The company wanted to expand its business of making mattress and pillowcases by manufacturing something that wouldn’t require a huge change in the company, and pillows were a perfect fit.
“For us, the question became what product do you want to get involved in?” Ouellette says. “We are in the textile business and we make things that protect mattresses and pillows. The one thing that we required of ourselves was we didn’t want to write a plan that saw ourselves making batteries for automobiles two years from now. We wanted to make certain that whatever we did we utilized our existing core competencies the best we could.
“I would suggest that any company that wants to grow should look around and ask themselves, ‘What are similar types of products that can be manufactured or distributed?’ You have to look at who the competition is and understand what the market looks like. Is the market ready for another manufacturer or distributor of those products? You also have to be honest with yourself and ask whether you’re just going to be me-too or will you be able to provide some innovation in that category that will differentiate you from the competition?”
Build your plans
Entering a new market, whether it’s a new product or a new geography, takes time and careful planning in order to do it successfully. You must be willing to listen to the advice of your team members.
“When it comes to identifying a new area in which to grow, you have to trust your executive management,” Ouellette says. “When they are giving their expert opinion on where to go, you have to believe in them. People who have been in a leadership position for a long time, I think their real expertise comes in being the experts in what has happened in the past, but that may not be the path to the future. To be able to listen to and not have all the answers on where you want to go in the future and trust those people who might have a better vision of the future is really critical.”
Because of a big pillow company going out of business, there was plenty of room for American Textile to come in and pick up the slack.
“When we first had an opportunity to ship some pillows in 2005, we knew that there would be some good growth opportunities — or assumed that there would and that turned out to be true,” Ouellette says. “An important ingredient in identifying when and how you want to grow is making sure you talk to your customers. Identifying an area that might suit your competencies is only really good if the customers are ready for another company to come into that market.”
Once it is clear that you can expand into a new market, planning must be the next priority. You have to have the ability to plan for further out than just your initial launch.
“I think the biggest thing is to have a strategic plan,” Ouellette says. “You generally plan for just one year and you have to force yourself to look out further than that, like three years. To look out any further than that is difficult to really come up with good, solid ideas. I would advise actually following that strategic plan and making certain that there’s the right group of people. Once you have that plan, you have to make certain that everybody in the company knows what your goals are.”
Once a strategic plan is in place, it is to your advantage to continue to follow and update that plan. If you create it and never look at it again, there is little point to it.
“I know a lot of people talk about strategic planning. I think there’s a couple of ways a company can go,” Ouellette says. “One is to have a plan and just (put) it away. The other, which I highly recommend, is having a plan and really working it every single month. It requires an individual in the company to have responsibility for that plan and have responsibility for making certain that everybody’s working toward it. Finding the time to work on the longer-term strategy takes a lot of discipline.”
Communicate and monitor your plan
Strategic plans can get complex and will help guide your company for a long time. It is very important that the CEO be out in front communicating the direction of the company and how that plan is coming along.
“A strategic plan can be kind of complicated, because it touches all of the company and it goes out for an extended period of time,” Ouellette says. “The thing that we did was boil it down into a very concise statement. Ours is called ‘Focus on five.’ The five means the five letters in focus and each of those letters means something. The F stands for ‘first to market.’ The O stands for ‘optimizing sales.’ The C is ‘channel expansion.’ The U stands for ‘us or the employees’ and the S stands for ‘systems and processes.’ Every month, we have an event where we pull the company together and we call it a ‘Focus on five’ meeting. The first thing we do is to have one of the sponsors of each of those initiatives talk about what they have been doing in that area. It’s that constant reinforcement. With our planning team we have quarterly updates where we get in a room and spend two hours going over the strategic plan.”
When your plan takes effect, you have to continue to monitor the growth you are seeing. Check your growth against your plan and communicate the results as you go.
“In the long term, you have to absolutely set goals,” Ouellette says. “You have to make sure people understand those goals, and you have to make certain that you’re tracking those goals on at least a quarterly basis. That shows everybody a commitment to it and makes certain that everybody is making a contribution to that plan on a regular basis. Otherwise it’s kind of like college where you go to the classes but the only time you study is for the final. We don’t want that. We want people studying for the final every single month.”
When new initiatives are created it is easy to forget about other areas of your business. It is important to keep tabs on the core areas of your organization.
“You should also make certain that you don’t take your eye off of the core business,” Ouellette says. “Oftentimes because something is new and exciting in the developmental stages, a lot of the resources that you apply to your core business can be siphoned off to go to the new venture. Growing another product line is not an additional duty for the people who are involved in your core business. You have to keep that core business funded properly and the proper attention on it. You have to make the investment in people and in resources to fund that new business.”
A big reason that Ouellette and American Textile have been successful is because they stuck to what they were good at, but they have also been innovative in how they improved upon their core competencies. Having people who can foster innovation is important to be able to continue to grow your company.
“Innovation plays a significant part in our company,” Ouellette says. “We were once told by a major retailer in this country that ‘new’ sells, and it does, provided that ‘new’ makes sense to the customer. Having a group of people responsible for product development is a major ingredient in being able to grow. If you come out with a product that’s just the same as everybody else’s, it becomes a commodity and a price war. When you come out with a product that is new and different, that’s what the retailers are looking for and that’s what the consumers are looking for. Have a group of people who are trying to develop ideas based upon where trends are going, what the consumer is doing, how people live today and how that differs from how they lived last year. If you can find products that can solve their problems or fit their newer lifestyle, that’s a way you have an opportunity to grow more rapidly.”
It’s very difficult to just create innovation out of thin air. You have to work at it and create a culture that will support innovation within your organization.
“You really need to create and invest in developing an innovative culture,” Ouellette says. “When most people think of Pittsburgh, they think of steel. We tried to get people from Pittsburgh who knew the textile industry, but unfortunately, most of the people who know textiles are located in the southeastern part of the country. You can either try to move the talent to where you are, or you can move where you are the talent. The latter has really worked for us. The major catalyst is getting the experienced people in the industry.”
Having people that understand your industry in and out is crucial for growth. If you are unable to properly understand your market you will lose to the competition. You have to be willing to do what it takes to get the right people.
“The first dollar spent on the right talent is so critical,” Ouellette says. “If you don’t have the right people who are charged with the responsibility and know how to execute the plan, not just have the desire but the know-how, that makes all the difference in the world. You’ve got to get the right talent and you’ve got to pay for that talent. They have to have all the right experience and background, not just 80 percent of it. You’ve got to have the whole thing in our opinion.”
HOW TO REACH: American Textile Co., (412) 948-1020 or www.americantextile.com
The Ouellette file
American Textile Co.
Born: Springfield, Mass.
Education: Bachelor of science degree from West Point; MBA from Duquesne University
What was the first job you had out of college, and what did you learn from it?
My first job after college was second lieutenant of the United States Army. I was a fire direction officer. I was responsible for computing the data required to fire 155 millimeter artillery weapons. I learned the importance of how to manage a small team, and I’ve found that those same skills for managing a small team apply to larger organizations. It’s all about people.
Did you see any action?
I was a pilot in Vietnam for one year between 1970 and 1971. I flew an army reconnaissance plane on the Cambodian border for six months, and then I flew a twin-engine transport plane for the last six months all over Vietnam, Cambodia and Thailand.
What is the best business advice you’ve ever received?
It is taking care of the people whom you work with. You have to always be aware of that.
If you could invite any three people to dinner, whom would you invite and why?
I would invite Dwight D. Eisenhower because it would be fascinating to hear about the Normandy invasion. I would love to invite [George] Herbert Walker Bush to dinner because I think he had one of the most interesting resumes of any president. And I would like to invite Arnold Palmer to dinner. Not only was he a tremendous golfer, but he had the ability to excite people and motivate people and anybody with those types of skills would be worth talking to.