Desk strategy - Clif McKenzie owns Watson and focuses on his employees and the environment
Puget Sound Business Journal August 26 - September 1, 2011
By Bethany Overland Staff Writer
Clif McKenzie, owner of Watson, knows that almost every small-business owner has an exit strategy. That’s the cycle in which an owner coaxes the company’s growth along until the “natural” point of selling it. But McKenzie also believes that exit strategies tend to get in the way of growth and planning for the long term.
“What we’re programmed to do is…to always have an exit strategy,” said McKenzie. “You run it, then you sell it.” Six months after buying Watson in 1990, some 30 years after it was founded by Grahame Watson, McKenzie said he called his two business partners (Bill Haggerty and Daniel Warn) and said, “This is what I’m doing for the rest of my life.”
There would be no exit strategy, no sale of the company nor any backing out. McKenzie’s plan had switched to the “continuation” strategy. More than 20 years later, McKenzie is still running Watson. Located in Poulsbo, Watson manufactures European-inspired office furnishings for major clients such as Motorola, Nike, and Boeing.
We’re in the top 2 percent of Boeing suppliers,” said McKenzie. Watson is in the process of patenting a tabletop originally created for Boeing employees that is reversible to accommodate either right-or-left handed people, he said. Once he had committed the remainder of his career to Watson, McKenzie-an accountant by trade-said his linear thinking took over. The company needed to establish some basic values that would allow for longevity.
McKenzie quickly decided that in order to grow his business in a way that would provide for the long term, he first needed to focus on his employees. “I refused to outsource jobs or profits,” said McKenzie, who now has 150 employees and an additional 30 subcontractors. “In effect, that would mean there was only one level of profit in the food chain, and that would allow us to keep building jobs and careers.”
Clif McKenzie owns Watson in Poulsbo
Next came a new strategy to replace the exit strategy he’d abandoned. McKenzie decided instead to focus on the financial stability of the company, which also translated into taking some calculated risks to encourage growth. “I knew that if I wasn’t willing to make investments, I’d lose some of the top people in the organization,” said McKenzie, noting that most people he wanted working there wouldn’t stay at a stagnant company. McKenzie also focused on paying down debts, focusing on containing his costs and putting cash in the bank-as much as 15 percent of his pre-tax income. “That way when ’09 comes and your revenues fail 30 percent, you can keep going,” said McKenzie. “Having cash always help weather the storm.”
Instead of focusing on sales in 2009, the hardest year for Watson, McKenzie shifted the company’s focus to its core development and product research. And, with that little cash nest egg McKenzie had been storing away, Watson was able to make an acquisition, purchasing Magna Design, of Lynwood. “It was great because we didn’t need a bank,” he said. He didn’t reveal the price. Along with the acquisition came a 14,000-square-foot expansion to its facilities in Poulsbo, an additional 40 jobs, and laser technology for fabricating the company’s own sheet metal.
“During those two years we worked harder than we ever have,” said McKenzie. But the result was a “rebound in 2010”, and overall growth of about 25 percent, he said. And 2011 will be even better. Watson projects gross sales of between $31 million and $32 million, results that McKenzie attributed largely to the company’s policy of insourcing. “We’re creating that value itself,” he said. “We’re dead serious about insourcing everything we possibly can.” That’s not the only aspect of his business McKenzie is “dead serious” about. He considers his company a steward of the environment: Watson has won multiple environmental awards for its efforts to be green and sustainable, even as a manufacturer. “We don’t even have chemicals in here”, said McKenzie. “I don’t want my employees working with them-everything is water-soluable-because there’s no spill that’s acceptable.”
McKenzie said his opinion on environmental responsibility is one he was introduced to as a child by his father. Walking home from his job at the Bremerton naval shipyard, his father would complain about the trash littering his path, wishing someone would clean it up. “Then he realized he was somebody.” said McKenzie. “And I’ve always wanted to be somebody, too. The reality is we’re all that someone.” At the end of the day, McKenzie admits that his love for Watson isn’t actually about the furniture itself. “It’s about manufacturing and making something quality with our own hands,” he said. “Our purpose doesn’t say anything about furniture.”
Reprinted for web use with permission from the Puget Sound Business Journal.
Copyright 2011, all rights reserved.
Watson™ is a thriving Pacific Northwest furniture manufacturer. We design and build agile workplace solutions for some of the biggest and most dynamic companies in the world and have done so for over fifty years. We make each product in our manufacturing facility near Seattle using methods rivaling the best. Our designs are user-driven and delivered with a modern environmental sensibility.
Watson has three brands. Watson Dispatch is a leading supplier of console furniture for the 24/7 public safety communications, Watson Desking™ provides European inspired freestanding and height-adjustable furniture for the agile office, and Magna Design™ reflects our commitment to the fine Pacific Northwest craftsmanship of modular casegoods. Watson furniture is built to the highest standards with precision steel construction, Pacific Northwest engineered board and a select palette of GreenGuard™ certified laminates.
For organizations valuing environmental assurances, sustainable practices are bedrock for Watson. Our factory sits on a 30 acre forested site near a protected watershed. The manufacturing facility has no floor drains and we aggressively pursue practices to minimize our impact on the planet. Watson is a recipient of the GSA Evergreen Award and Washington Governor's Award for sustainable leadership.
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