Braving the rapids

As Sam Johnson divided his corporate empire into pieces to be overseen by each of his children, he imparted some wisdom to his heirs.
Johnson told them that a handful of principles can guide a good company through economic cycles of boom or bust:
á Know your customer and know how the customer wants to use your product or
service.
á Empower your employees and reward them, inspiring their loyalty and
creativity.
á A company benefits from a strong community.
á Innovation is the key to long-term corporate survival.
Helen Johnson-Leipold took her father’s wisdom to heart before he passed away
last May, and as the only family member who is on the boards of directors of
each of the four Johnson companies, she is executing those strategies as best she can.
She is the chief executive officer and chairman of the board for Johnson Outdoors Inc. She also is the new chairman of the board of the Johnson Financial Group and is a member of the boards of directors of JohnsonDiversey Inc. and S.C. Johnson & Son Inc.
Johnson-Leipold, the keynote speaker of this year’s Northern Trust Economic Trends Breakfast presented by Small Business Times, will face several formidable challenges in 2005.
Johnson Outdoors Inc., her pet project, is in the midst of a transformation from a publicly traded corporation to a privately held company. Under terms of the proposed transaction, JO Acquisition Corp., comprised of Johnson-Leipold and other members of the Johnson family, would pay $20.10 in cash for each share of the firm, which is a global developer, distributor and marketer or outdoor recreational products. Shareholders have not yet voted on the acquisition.
Johnson Outdoors Inc.’s brand name products include: Scubapro, SnorkelPro and UWATEC diving equipment; Old Town canoes and kayaks; Ocean and Necky kayaks; Minn Kota electric motors; Humminbird fishfinders; and Eureka tents. The company is No. 1 or No. 2 in the world in each of its product categories.
Johnson-Leipold can’t publicly comment about the family’s proposed acquisition of Johnson Outdoors. However, she says the lessons learned from her father will guide her on her corporate journey.
"His approach was that everything revolves around people. You give people the opportunity to do something better. You want everybody to feel they can change the way we’re doing things," Johnson-Leipold said. "When I think about Dad, I think what jumps to mind is to treat your people right. That will translate into productivity, job satisfaction, innovation and great products."
Innovation was a focal point for Sam Johnson, as S.C. Johnson & Son – a.k.a. "A Family Company" – developed familiar consumer brand names such as Windex, Glade, Pledge, Raid, Off, Shout and Ziploc.
In 1973, Sam Johnson toured the Old Town Canoe plant in Old Town, Maine. Back then, canoes were evolving to be mass-produced with aluminum, rather than wood. In the back room of the plant, Johnson found a system that was forming a plastic canoe prototype. Industry experts at the time said plastic would never hold water in the canoe market, because it was too expensive and not yet practical.
Trusting his instincts, Sam Johnson believed otherwise, and he bought the company for $1 million a year later.
Turns out that famous "Plastics" line in "The Graduate" movie was not so farfetched. Today, nearly all canoes are plastic, including Johnson Outdoors’ Old Town line.
The Old Town saga was one of countless times in which Sam Johnson’s vision was ahead of his time.
"Dad knew that that was the future of the canoe business. He’s probably up there saying, ‘I told you so, Helen.’ His instincts identified innovation," Johnson-Leipold said. "He was an incredible, insightful, gut-reaction businessman. He always said, ‘Listen to the consumer. Did you go out and try the product and sit alongside the consumer? Did you go into their house and see how they clean their house?’"
Johnson-Leipold hopes she has inherited some of that vision. In fact, she may be betting the future of Johnson Outdoors on it.
After years of research and development, the company unveiled a new line of Escape electric boats this week. The plastic boats are powered by the company’s Minn Kota electric motors and are designed for use within a quarter-mile of shore. The line includes a mini-pontoon boat that will sell for $7,000.
The plastic boats are easier to transport and navigate than their aluminum counterparts. Their electric engines are quieter and more environmentally friendly than gas-powered engines.
"They’re convenient and more user-friendly. They’re silent," Johnson-Leipold said.
The new Escape line, which weds the company’s plastic watercraft and electric motor expertise into one product line, includes electric tour boats, electric chaise loungers and electric fun boats, all propelled by the Minn Kota "flip-the-switch-and-go" propulsion system.
"The Escape watercraft line leverages our technical expertise in boats and electric motors and our unique ability to turn consumer insight into innovation. These easy-to-use products remove many of the barriers that prevent people from boating," Johnson-Leipold said.
Johnson Outdoors will be displaying the new Escape line at boat shows and marine stores throughout the Midwest this year.
"We will learn a lot in the first year. It’s very exciting, because we’re building a brand from scratch. There hasn’t been innovation in this area (watercraft) in years," Johnson-Leipold said. "We’re creating a segment that doesn’t exist. It’s electric boats. There’s tons of room for innovation. Each year, you add to the line."
Each year, Johnson Outdoors’ canoes, kayaks, motors and electronic equipment are updated with new features that give consumers reasons to return and upgrade.
Johnson-Leipold knows something about marketing to consumers. Not content to just ride the coattails of nepotism, she struck out on her own early in her professional career. After graduating with a bachelor’s degree in psychology from Cornell University in 1978, she compiled more than 25 years of marketing and senior management experience, as she directed advertising for some of America’s major consumer packaged goods companies, including Kraft, Sara Lee and Beatrice Foods.
Brand equity is at the heart of reaching consumers, Johnson-Leipold said. To build a brand, she adheres to a core set of principles:
(1) Create a quality product.
(2) Build customer trust.
(3) Meet customer needs.
(4) Address consumer trends.
(5) Provide value for the price.
To survive in 2005, Wisconsin companies, which have higher labor costs, a higher tax structure and greater environmental regulations than their foreign competitors, must be innovative and must find ways to deliver value to their customers, even if that value comes at a higher price, Johnson-Leipold said.
"It’s innovation, customer service and a quality product," she said. "The competition is very intense. We are not the low-cost producer. The way we win in the marketplace is making what the consumer needs.
"Consumers are willing to trade up, they’re willing to pay a premium for something that meets their needs better. People will pay for value," she said. "To play the price game, the margins are so thin, especially with a small company. We create our own growth, and we do that through innovation."
A Family Company
The family of the late Samuel C. Johnson oversees an empire of four key companies in Racine. Johnson’s daughter, Helen Johnson-Leipold, is on the boards of directors of all four companies.
* S.C. Johnson & Son Inc. is a 119-year old company with more than $6 billion in annual sales. The corporation employs more than 12,000 people globally and sells products in more than 110 countries. Its familiar brand names include Windex, Glade, Pledge, Raid, Off, Shout and Ziploc.
* Johnson Financial Group is a financial services corporation with nearly $3 billion in assets and companies in Wisconsin, Arizona, Europe and the Caribbean. The firm’s four divisions include: Johnson Bank, Johnson Insurance, Johnson Asset Management and Johnson Trust. Johnson Financial Group has grown from a single bank in Racine in 1970 to become a global financial services corporation and the largest independent insurance agency in Wisconsin.
* Johnson Outdoors Inc. is a $355 million global company that distributes and markets outdoor recreational products. The company’s product lines include: Scubapro, SnorkelPro and UWATEC diving equipment; Old Town canoes and kayaks; Ocean and Necky kayaks; Minn Kota electric motors; Humminbird fishfinders; and Eureka tents.
* JohnsonDiversey Inc. is a $3 billion global company that consists of two units. The professional unit provides commercial cleaning, hygiene, pest control and food sanitation products to retailers, building service contractors, hospitality firms and food service operators. The polymer unit produces acrylic resins used in printing,
January 21, 2005, Small Business Times, Milwaukee, WI