In the last century, Wisconsin manufacturing companies were a major force in the entrepreneurial economy of the United States. We could not have won World War II without products manufactured in our home state.
Most of those companies in Wisconsin were startup family businesses. Many, such as Harley-Davidson, went on to become publicly traded companies on the Fortune 500 list.
We rightfully could take pride in our stellar manufacturing base, our reputation for quality and a very deep supply chain.
Then the world changed. Other countries began to compete for our manufacturing operations by offering significantly lower labor rates. With the growth of the advanced manufacturing economy and the Internet, many of our businesses were caught flat-footed.
One example is that 3D printing is now the rage nationally, and yet Wisconsin lags the nation in the use of this new technology.
The impact on family-started businesses was particularly horrific. More often than not, the founder was still in charge. Like all great entrepreneurs, they fell in love with their own technology and approach to the market as it had always worked for their companies.
This tendency is best described in the book “Power of Habits” by Charles Duhigg. All of us are in many ways hardwired to our habits, but this is particularly true in family businesses where the founder “always knows best.”
Conrad Hilton sold the Hilton international brand to TWA because he was worried Hilton could not compete in foreign markets. It will stand as one of the great tragedies of the Hilton story.
Kodak turned its back on digital photography because it was wedded to chemical processing.
Today, there are countless Wisconsin companies struggling to make their way in the world where technology dominates and the economy no longer resembles the landscape when the founder started the company.
Consider Glendale-based Weyco Shoes, owner of the iconic Florsheim brand and a variety of other well-respected brands.
In 1892, Milton Florsheim began producing shoes in a small factory located in Chicago. The first pair of Florsheim shoes made by Milton and his father, Sigmund, were remarkable for their comfort and high-quality workmanship.
As a new class of working men and professionals emerged, Florsheim shoes came to symbolize the “go to” shoe for an office environment, which continues to this day. Though specific shoes may change from season to season and year to year, all Florsheim shoes are designed for the “man who cares.”
Due to shoe manufacturing being highly labor intensive, Florsheim saw the industry being impacted by lower labor rates overseas, and U.S.-based shoe manufacturing was severely hurt by cheaper imports beginning in the 1970s. The realization that its highly skilled American workforce could no longer be wage competitive became a reality, and in order to survive, manufacturing needed to be transitioned to countries outside the U.S.
Fifth generation leaders Tom and John Florsheim were faced with the challenge of outsourcing manufacturing operations to suppliers throughout the globe. Trying to manage a supply chain worldwide required a fundamental change of habits.
But the key to the Florsheim success story is not just outsourcing the manufacturing operation. The company consolidated much of its distribution into its Glendale offices, where it has a state-of-the-art facility. It has expanded to over 1 million square feet.
Just watching this distribution center is like watching the Amazon warehouse on steroids. The company has evolved a highly automated process that keeps labor rates down and delivers quality to customers.
But critical to its survival in a highly competitive retail shoe market is the need to leverage costs over a larger revenue base, which Florsheim has done by acquiring additional brands over the years.
But the shoe market is changing dramatically as men and women have gone to a more casual look. Shoes are an important accessory to clothing in a world where dress styles are continually evolving.
How does Florsheim hang on to a traditional brand identity but evolve new styles and new approaches?
It turned to the evolving new process of “design center solutions.” This process is user focused, involving ethnographic observations of customers to observe their behavior. That leads to insights that guide new designs and working prototypes that can be tested on users.
The Florsheim brothers adopted this methodology and began by requiring state-of-the-art technology for shoe design; they hired competent, well-trained technicians and designers to create multiple new looks in each of the brands the company owns.
Ernest Hemingway, when he finished writing the book that became known as “A Farewell to Arms,” created a list of more than 100 names for the book before he selected the final one. Innovation is all about creating multiple options so there can be a wide variety to choose from.
The Florsheim designers meet with salesmen to seek feedback on the marketplace and test new designs and new looks. By creating multiple options, designers have the chance to select the very best of the best.
The combination of highly trained designers, listening and testing on the sales staff has allowed Weyco to survive and prosper. Watching the designers create and alter shoe design is like watching an artist at work. It is the heart and soul of innovation, exploring multiple iterations before final selections.
They now supply companies like Bon-Ton, JC Penney, Kohls, Zappos, Nordstrom, Macy’s, and the list goes on.
Tom and John Florsheim are innovative and energetic leaders that truly get excited about their operation and their ability to compete creatively and innovatively in a relentless market.
Tom credits his dad with raising two sons who are not at war with each other and understand that survival depends on innovation and breaking past habits.
This is a family business that has learned how to survive through creative innovation that adds jobs to the Wisconsin economy and keeps us proud of our heritage.
Dan Steininger is president of BizStarts Milwaukee, a lecturer on creativity tools at the UWM School of Continuing Education and president of Steininger & Associates LLC, which teaches how to drive revenues through creativity tools. He can be reached at Dan@bizstartsmilwaukee.com.
