Long a respected organization in our region and internationally, SUN HYDRAULICS is highly regarded for its workplace values: Open doors, no titles, collaboration over communication.
I spoke to Allen Carlson about how Sun Hydraulics uses social media. In short, they don’t. One of the first companies ever to use the internet, they have elected not to blog, podcast or join social networking sites.
This is one example of how a company decides whether to utilize social media in their marketing mix. Carlson says business is good. They are known nationally and internationally. If an employee thought it would help business, they would ask for it – employees are not requesting that the company blog or join social networking sites. Carlson is frequently asked to join Linked In, a professional social networking site; so far he has declined.
Presentation:
Carlson gave us the history of SUN HYDRAULICS. Well-known for eschewing titles, they were required to submit them when they went public. Carlson’s business card carries no title.
SUN HYDRAULICS is also still using print Annual Reports and again, they required by the government to have it in print and available to anyone who asks. They carry the last ten years in archives on the website. As of 2010, the FEC will allow Annual Reports to be digital only.
This will change how annual reports are put together, how they look and how they will be distributed.
SUN HYDRAULICS was founded in Sarasota in 1970 and they didn’t sell first product until 1972. They became a national company by the mid 70’s and set up distributors around the USA. If you wanted to buy a product today, you would purchase from their dealer in Tampa.
Their model to go to market is like the automotive model - the customer has probably determined what they are buying prior to going to the dealer.
SUN HYDRAULICS customers have probably gone to the website, made their buying decision before going to a dealer. People come to their website, gather information, make a buying decision and fulfill it with the local dealer.
As SUN HYDRAULICS moved from being a local to a national to an international company, their perspective on marketing changed dramatically.
The web presented SUN HYDRAULICS with the greatest opportunity to grow. SUN HYDRAULICS was one of the earliest adopters of the web to deliver information. Their Harvard studies have been done on their company.
Here are three product categories of SUN HYDRAULICS:
Cartridges (about 5 million a year)
Integrated packages: an example of an application would be baggage handling equipment
Manifolds (make 5 million a year)
They have created differentiated products.
SUN HYDRAULICS is like BMW – they differentiate their products. They look different and cost more.
They have avoided commodities. They don’t sell Chevrolets or Fords – they sell BMWs.
Not only do they have the fastest or best looking products, they have the broadest array.
Their website is like an automotive website - you can configure the product.
You can spec different options. There are 25 million configurable products on their website.
The company has a 23% compound growth rate annually. They accomplished this through internal efforts. They went public in ‘97. The founder, when they were a 50 million dollar company, started looking at what they needed to do to ensure longevity. He decided going public was the answer.
Here is the business mix as of today:
47% in the Americas
33% in Europe
20% in Asia
They have locations around the globe now and their first international location was Switzerland. They make it easy for the customer to purchase. They did 1.5 million dollars of business in Singapore last year and they hadn’t visited them in 7 years. 2008 was their best year in business.
They invite other potential clients to visit and observe how they work. They do not require other countries to adopt their style. It is said that some other locations are more Sun than Sun is.
Time changes things – today they have 750 employees. The values are the same and the culture is the same but the mechanics have changed.
They serve a variety of markets in mobile and industrial fields. New business includes wind power, wave power, simulation, amusement parks, (Disney is a customer) cinema.
SUN HYDRAULICS plans way out in the future – 3-5 years. They tell potential investors that if they base decisions quarterly, they should choose another company.
Soft Assets: (A lot of companies tend to forget the importance of soft assets.)
BRAND - If the brand is strong enough, customers don’t Google it; they go to SUN HYDRAULICS directly.
DISTRIBUTION
SUPPLIERS
INTELLECTUAL CAPITAL
CULTURE
Guiding principles:
Be recognized as the BMW of the industry.
Differentiate product & service
Culture
Values
Geographic presence
They didn’t want a website packed with .pdf files. If you request information, the request comes from different servers so that the response to the visitors question is a fresh combination of variables. They can download into a STEP file or into the machine that needs it.
They have spent 10 million dollars on website development. On-going support of this website is 2 million dollars.
Management is all about …anticipation and preparation.
For example, they move production up early in the summer because of possible hurricanes. They get products out 4 days earlier than stated.
A leader sets the tone and establishes the how: The design of the office, tone, feel.
The knowing/doing gap: Harvard Business School: Organizations have lots of people who know what to do, but can’t get out of their own way. Some can do, but lack the background. They try to put knowers and doers together.
Communication: Anticipate who the audience is. Understand what they want to take away. How will you deliver? Paper? Letter? Annual Report?
Then, put together a draft; start with bullet points.
Decide what the take away is that the customer wants: It could be the style or feel of the piece.
Instead of basing things on budget, look at the opportunity. What’s the ROI?
They don’t advertise because they spend money building the brand.
They want to look like a global company but they want the local community to feel good about them. They believe that they are not communicating internally, they are collaborating. “I’m not telling you what to do but I’m telling you how I think or feel about this subject.” That is their style.
As they’ve grown from local to international, they’ve tried to keep the value of face to face communications favored by the founder. When they were small, there were no private offices. Now, they use e mail to collaborate between teams in different countries. Everyone can be in on the conversation.
Carlson returned to the photo on his power point that he started out with: He had asked us to think about this during the presentation and guess at the end. The closest guess was "museum piece." It turned out to be a plane once owned by Chairman Mao. It was being auctioned off in Shanghai the day he arrived on Oct 7, 2008. it is still available for a bid – the current bid is $1.7 million. However, it can no longer fly. It would be a museum or collector piece.
Q&A:
Who are your competitors?
The big box companies – They have $5-10 billion in sales and one piece of it is similar to theirs. They tend not to be as good. There are a bunch of start up companies that are very good. They don’t compete with us, they are more like a Chevrolet.
How did you build the brand?
The cartridge valves were demonstrated engineer to engineer. The industry is small and close knit so everyone knows everyone. The fact they were a small company in hurricane alley was an obstacle and so that is when they decided to open small facilities around the world.
Every package has the SUN HYDRAULICS logo and website address, every piece of literature, all communications…they keep a very consistent look.
The communication in the company is verbal - capital transfer is verbal – facilities are attractive, each one has a water feature – all facilities are similar (except China) on the interior, open office with no closed doors, you feel it immediately and you wonder how they get any work done.
How many employees invest in the company?
100%. They also get stock from the company annually. They also have a stock purchase plan.
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