Navigating through Growth
Over the past year, Vitamix has taken the high performance blending industry by storm, growing at an astounding rate of 52 percent, and to think it all started with a can opener. Jodi Berg, fourth generation President and CEO of Vitamix, walks us through how her family's company started in 1921 and how she maintains the legacy and culture that has been so important to its success. Disclaimer: After reading this interview one of three things has been known to happen:
- A Vitamix blender suddenly appears at the top of your Christmas list? Magic.
- A smoothie not only comes to mind when you're thinking of what you'll have for breakfast but it also has kale in it. Yes, the green leafy vegetable you normally wouldn't touch in the grocery store.
- You're inspired, like we were. Change the world for the better.
Q. Like many middle market companies, Vitamix is a family owned business. Tell us about that unique history and a little bit more about Vitamix and the culture.
A. It's a great question because our history has so much to do with who we are today. We are in our 93rd year; the company was started by my great grandfather in 1921. He started it like so many other small and mid-market businesses today. During The Great Depression he needed a way to take care of his family, so he started selling this gadget called the can opener. He sold the can opener because it was very new to the market and people were trying to open cans with knives and all sorts of things. They were getting cut and, with the way healthcare was back then, it was a huge issue, so this whopping 25-cent can opener was saving hundreds of dollars in medical costs, and of course they needed cans because people couldn't afford to eat anything else. That was the beginning of our foundational philosophy, which is to make sure the value of what we are selling always exceeds the price.
Flash forward to the 1930's: We have a letter that my grandmother wrote to a friend of hers and in it she said: “I realize I need to eat healthier. I realize I need to eat more fruits and vegetables. I don't know how to do it and I don't know how to make it sustainable.“She said: “I want it to taste good so my guests will come back and I want to have enough variety so it's something I'll do on a regular basis.“That same year, my grandparents were demonstrating the can opener as well as other kitchen products they were selling in Cleveland at the Great Lakes Exposition and someone introduced them to this new gadget that had been created called a blender. That was really their “Ah ha!“moment. They realized they could use a blender to eat healthier! The other thing that happened was they fell in love with the city and decided to move their company to Cleveland, so the 1930's was a pretty important time for us.
Since then, we have gone the route of using blending equipment to help people live a healthier lifestyle. Imagine how big of an uphill climb that was in the 40's, and 50's, (and 60's, and 70's, and 80's, and 90's), because it wasn't the direction the rest of the world was going. Over time, our blender evolved from the one we were introduced to in the 1930's as we made the commitment to focus on whole foods. We wanted our blender to last, we wanted it to perform, and we wanted it to be this wonderful tool for processing whole foods, which is how we separated from the pack and our Vitamix became closer to what you know it as today.
In the 1990's, the food service industry approached us and said “Why is it that the consumer market has this really powerful, durable, blender and we have this disposable stuff?“Essentially it was because we had never thought about going into the food service industry. Our focus had been on health and wellness.
Shortly thereafter, we decided to enter the food service market and my father had the foresight to know that if we were going to go into food service we also needed to go global, so in 1996 he asked me if I would head up our international division, which is what first brought me back to the company. Then in 2007, my father said “I want to retire and I need to find a replacement.“My response was “Great, I'll help you find that person!“He said “No, I'm actually thinking it'd be you!“I laughed and said “Come on.“His response was “No, I really think you have a vision for where this company is going and I think you should fill this role.“
I'd never been a CEO, I'd never thought about it. It wasn't even aspirational for me, but it dawned on me that if somebody else were the president of this company and they were driving the vision, and if that vision was smaller than what I saw, I would be very, very, frustrated, so after lots of discussion I finally said “OK. Give me two years to get ready.“In 2009 I stepped in as president.
Q. Being the 4th generation president, how do you go about maintaining the culture of your family inside the business and how do you ensure that those founding principles continue on?
A. That's a great question because I'll tell you, culture is everything. In order to maintain the sales growth we've experienced over the past couple of years we've had to hire a number of employees. To give you an idea of the magnitude, over the past 15 months, we've hired several hundred people so we literally have a big chunk of our workforce that has been with us less than 24 months, which is why that culture question is so important. It used to be that I knew everyone's name and now it's a full time job just to be sure I meet them!
In 2003 we looked ahead and realized that this could be a really good time for our company, but we were not ready. We weren't prepared for what was coming, especially in terms of culture, because up until that point we had done what a lot of companies do: When you hire new people, you bring them in and they get acclimated to your culture because there is only one of them and a lot of other people. By the time they're acclimated, you're ready to hire the next person and so on. This worked, but we knew if we were going to be hiring a lot of people, this issue of culture could become a concern.
Dr. David Cooperrider, of Case Western Reserve University, is the father of a concept called “Appreciative Inquiry,“which is a process where you interview people specifically to ask them what it is that's really right. You then articulate it, share it, nurture it, and basically allow it to grow.
We asked our employees, “What is it about this company you value the most and don't want us to change? Basically, “Tell us what your lifeline is because you're giving us permission to change everything else around you.“That's how we came up with our values today: Family, Customers, Quality, Integrity, and Teamwork, and over the past nine years we haven't changed any of them. Every time we go through change, if someone is feeling panicky: “You're moving my location, you're moving my office, you're sticking me in a closet with three other people because you don't have any other space, there's no parking, etc.,“we go back to these values and we say: “You've told us these are what's most important. Let's have a conversation. What is it about this company you love? Is this changing? No, it's not. OK, take a deep breath, we're not going to change that.“
Since then, we have used that same process to identify our vision, our business objectives, and our mission. When someone is interviewing, we're actually looking to find out whether that person shares these same values and whether they fit into the culture.
If they do and they're brought on board, it's part of the onboarding, part of the orientation, part of department meetings, and a part of communication. It's a part of everything and it keeps us aligned.
Probably one of the most important pieces of it is this vision statement. As a company we want to change the world so we need to find people that have that much vision and personal aspiration to make a difference. When you find individuals who want to improve the vitality of other people's lives or want to make a difference and you give them an environment where they can, there is just a whole lot of support in that culture. Once people come on board, they don't want us to change the things they like about the culture so they scrutinize new people we hire and they are hard on each other to make sure we don't lose it. They essentially hold each other accountable, and one of my goals as we become bigger is to never lose sight of that.
Q. How do you manage the growth and the operations against all the external influences out there today?
A. There are a lot of external influences. One of our largest is, for however many decades, we were “it“when it came to high performance blending. We actually defined it.
Most markets have three boxes: your bottom market, your middle market, and your top. Over time, these boxes balance themselves out but, in our case, we were an anomaly because for almost 50 years everyone else was in this lower box of blending equipment and we were the only ones in the top. The reason we were able to maintain that is we were direct. To us, you may be next-door neighbors, but we would only reach out to you if we felt you were a good candidate to hear our message. We flew under the radar for a really long time.
In order to navigate through our growth, operationally, we had to change our business model. As people were becoming more aware of the impact of what they ate had on how they felt, we realized we needed to be where people were looking for solutions.
Given the market trends at that time, there was a possibility that another company would try to own this new space that was developing. I'm a bit competitive, and being fourth-generation, you feel the weight of all the work done before you, not just family-wise, but every employee that has ever worked to make the company what it is today. I wasn't about to let some other company come in and take over this market, so we had to become a really big brand, quickly.
Q. How do you go about acquiring and retaining talent?
A. I go back to culture when it comes to talent. If you think about where you focus most of your energy, it's typically around something you personally want to achieve. When it's something you believe in, you're willing to put the energy in to achieve it. You're going to get up at 4 o-clock in the morning and exercise if that's your goal, so our philosophy is not just to hire people who align with our mission and vision, but try to find people who have their own personal vision for who they want to be and what they want to achieve in their lifetime. We feel by working at Vitamix we can help them achieve their vision and goals by doing whatever they are best at doing at Vitamix.
It has a lot to do with finding the right people but also retaining them, which goes back to one the benefits of being a privately held, middle market company - we get to do things differently. We don't have to look at the quarterly earnings. We can think long term.
For example, we have a profit sharing program for our employees so they all can benefit when we are profitable and everyone understands that their job has something to do with the profitability of the company.
At the leadership level, you make sure everyone understands the direction you're going. You stay focused, align everything you're doing in the organization to set the playing field, and then hire people that are talented and say “Go!“Let them do what they do best!
Q. As you look at the growth you've achieved, you must have a strategy in place. How do you go about internally setting those annual goals, communicating them, and then tracking your progress?
A. Our strategic planning process is dynamic and it's going on all year. During each of our planning sessions we share what we know and then ask for feedback, making it a really engaged discussion. We think about what it all means for the company and then roll everything into a strategic plan.
After we develop strategic objectives, we go back to the team and say “How does this feel? Does this work? Do you understand it? Does it make sense? Will you be able to apply it so that people know whether we're on track or not?“
We then communicate our plan, letting people know “This is where we are going and how it applies to you at a high level.“We also set metrics to track how we're doing, and have a board of directors that we report to and choose to have because they hold us accountable.
Q. For you to continue this growth you must have to attract new customers, new distribution channels, and cultivate deeper relationships with those channels. How do you do that and what makes you successful at it?
A. The fact that we're both in the commercial market and the consumer market works very much to our advantage. People see our products in the top food chains, coffee shops, and restaurants, and the beauty of it is, the market is growing as more people want healthy options when they go out to eat.
We really feel the best way to get new customers is to never lose a customer we already have. We want to be in the position to say, not only is our market share â€˜X' but it hasn't gone down. We focus on customer retention by building relationships with them. We're not the least expensive option and there are a lot of other choices these days so we look at the total cost of ownership. We've done a calculation based on the quality of our product, how it's built, and the service and maintenance needs compared to others in the market. If you take the cost of someone using our blender in the commercial market over its lifetime, our product is actually less than the cost of the straws a smoothie chain will use to make their product.
On the household side, you may think you see us everywhere but our market share is actually relatively small, so we have a lot of room for growth. People are realizing the value of being able to eat three to four servings of fruits and vegetables before they even leave the house in the morning. They're realizing you can get your kids to eat spinach or kale before they go to school and the impact it has on their brain is just incredible. We have a philosophy that we aren't actually hiring a new customer when we sell a machine, we are hiring a new salesperson.
Q. With vibrant health at the core of your mission how do you incorporate that into your wellness and benefits?
A. We pay our employees' health insurance premiums and then go one step further by reimbursing their co-pays and deductibles if they achieve certain health metrics. To help people achieve their metrics we have a beautiful walking trail around our headquarters facility as well as a fitness center. We have what are called "Lunch and Learns" where we bring in people to talk about health and wellness and other ways for people to be successful in achieving their wellness goals. Everyone gets a Vitamix when they work for us and then lessons on how to use it.
Q. What sort of technological enhancements do you look to infuse in your product in the future so you can stay ahead of the market?
A. Innovation has been a part of our culture and who we are for a long time. We are very fortunate in that we had to figure out how to maintain it and not create it. Most people might not know this but Vitamix actually created the very first infomercial. Good, bad, or ugly. We don't do it anymore but we started it.
We do a lot of market research and have a lot of conversations with our customers. We focus on understanding what the challenges are and what is really happening in stores. We also know what people are eating, how they are eating and how they want to interact with the machine, and we work on those challenges.
Q. With the growth rates you've been experiencing, what type of supply chain relationship or collaboration do you have to make sure your production is meeting the demand?
A. The majority of our suppliers are within 100 miles which is very strategic on our part so we can keep the dialogue and exchange going. We create as close a relationship as we can and help them grow. We are as open as possible about our growth so they can prepare, because in some instances we're asking them to invest in their business before our growth actually happens. You have to have as close of a partnership as possible.
Q. How does your marketing to the American audience differ from your marketing to other parts of the world?
A. Well, there is marketing and then there's brand. Brand never changes. We keep that consistent around the world. How people want to hear the message is very different. How they want to see it is different, too, so we work hard to understand what it is the people in that culture are comfortable with.
The one thing that everyone around the world does is eat, and what we eat affects how we feel. How we communicate that message in China and Taiwan or where they are making soy milk and soups that we wouldn't necessarily eat here is different. Our recipe books, for example, have to be altered when we go into those countries.
I didn't realize how many middle market companies aren't going global. For Vitamix, it was one of the most rewarding things we have ever done so I would encourage middle market companies to explore their options.
To learn more about Vitamix or to find other recipes check out its website: https://vitamix.com/