Be No. 1
Middleby’s industry is turnkey and simple: You make a range of
products and you go to visit a restaurant and sell them all. But
Bassoul realized something that a lot of companies struggle with:
Middleby wasn’t that great at anything.
“The problem is if you’re not No. 1 or No. 2, then you’ll never get pricing,” he says. “So, being No. 1 always generates a higher price premium because you can service your customer better, you can innovate
better, and you can retain your employees better because you can pay
them better bonuses.”
So Bassoul made a decision that he recommends to you if you
need to get your company out of a rut.
“We audited all of our engineering resources, and we decided we
wanted to be No. 1 in one segment — and we were not No. 1 in
anything,” he says.
That audit told him that his company could not be No. 1 in things
like refrigeration or dishwashers. So Bassoul and his team
dropped everything but the hot side — conveyor ovens, fryers and
the like. Knowing that area was the strongest, they put all of their
resources into it and began doing new things. With more engineers
working on that core competency and more salespeople dedicated to it, Middleby was able to start leveraging a new customer
base. With more than 60 percent of the sales going to just three
customers, the company was in a risky area, but by taking a new
risk on just one core competency, they actually made things safer.
Having bet everything on the hot side, Middleby began getting its
foot inside the door with new customers by offering the most liberal guarantee in the industry.
And that’s Bassoul’s first lesson for you: If you want to start digging
your company out, find something that you do well and do it better.
You have to be responsible for dropping your dead weight and charging your people with being truly great in one area.
It was risky, but here’s a sneak peek on how it worked for
Middleby: “Our market share increased from a 6 percent to around
20 percent,” Bassoul says. “And today, we are No. 1 or No. 2 in
every segment we serve worldwide.”
