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Nuts & Bolts Innovation: Bob Kierlin, Fastenal, and PlastiComp

I recently had the opportunity to meet a delightful, innovative and successful gentleman, Bob Kierlin, while participating in a Global Technology Conference at PlastiComp, in Winona, MN.  Bob, an investor in PlastiComp, is a successful entrepreneur in his own right, was kind enough to join our group and tell us a little about his company, and innovative philosophy that made it the success it has become.

Bob founded Fastenal, with the idea that small businesses might need a good, convenient source of nuts, bolts and other fasteners. He started the business with $37,000 in capital, with one store. Gross sales in 1968 was $18,000, and the company went public in 1987 (with sales of $20 million). By the end of 2007, Fastenal had 2,160 stores in 7 countries - with sales of over $2 billion; a gross profit of 51%, EBIT of 18.3% and a net profit of $232 million (11.3%).  On any basis, it's been a financially successfully venture. Even better, it's been personally rewarding for its many employees, and an example for others to try following.

Here are a few things that Bob had to say about his experience and philosophy that I thought worth remembering and passing on (the following are from my notes on Bob's talk, as verbatim as possible):

• An organization is a group of people who come together for a purpose.
• An organization is people.  Focus on the people.  Don't hide behind "the organization".
• There are two necessary things for an organization: 1. a common goal; 2. to use the potential of all the members.
• Grow through customer service.
• Use the creativity of all concerned.
• No subgroups or divides (in the organization).  All employees go in through the same door. No reserved parking places (if you want a good one, get there early).
• Everybody gets the same health plan, benefits, etc.
• Fastenal is in the people development business, and gives preference to people with no experience.
• The company operates "the Fastenal School of Business".  All employees go for two weeks, managers for five weeks.  This has created a virtual "university of industrial distribution", and others always want to hire Fastenal's people.  Bob meets with all prospective store managers personally for 2 1/2 hours.
• Allow/encourage independent decision-making and autonomy (30% of store inventory is ordered autonomously by those at the 2160 stores).
• Promote from within.
• Encourage "chaotic communicatiion": anybody can call anybody, anytime (no organizational barriers).
• Don't let initial failure stop you (one of Bob's original ideas was to put fasteners in vending machines - which didn't work out, but the rest certainly did).

                  Mr. Kierlin has been the Chairman of the Board of the Company and has served as a director of the Company since the Company's incorporation in 1968. In addition, Mr. Kierlin has served three terms as a Minnesota State Senator since April 1999. Mr. Kierlin served as Chief Executive Officer of the Company from 1968 through December 2002, and as President of the Company from 1968 through July 2001. Fastenal and its people have been noted for their accomplishments by Morningstar, Forbes, Inc., and other publications and remain a leader in their field, continually outperforming many comparable and larger companies.

In his closing comments, Bob said he was amazed that he has been able to do all this without ever playing golf.  During the Q&A following the session, he was asked what he'd like on his headstone, and replied, "I'd rather be at Fastenal!"  Great guy.  Great company, by any measurement.

So, what's the innovation here?  Primarily, good leadership and common sense (which I, and many say is not common enough) - applied vigorously and continuously.  Bob and like-minded others have brought their experience and talents to PlastiComp, and are now helping Steve Bowen and his associates grow their company with its innovative technology in long glass fiber-reinforced thermoplastics -  and with a similar common sense philosophy, based on people with a common goal.  As Steve says, "It all depends on everything".  Take a look at both companies' websites (links above), and you'll see what I mean.

Innovation in Lighting – LEDs Changing the Paradigm on Cars & Streets

LEDs (Light-Emitting Diodes) are changing the paradigm on the streets – literally, with new applications in municipal lighting, as well as with growing usage on vehicles.

With their small size, energy-efficient and low-temperature light output, LEDs have become the favored source for lighting in computers and other electronic applications. Now they are being increasingly used in total vehicle lighting and municipal street lighting.

LEDs on Cars - from Back to Front

  In the automotive industry, LEDs were earlier applied in, and have since become the primary choice, for CHMSLs (Center High-Mounted Stop Lamps) – due to their small size, ability to be packaged in small spaces, high efficiency/low heat light output, and longer life (up to 10X, resulting in little/no need to replace them in locations difficult to access).

Recently, LEDs have been growing in usage in other automotive lighting applications worldwide – particularly in  rear lamps, allowing new design freedom, as well as vehicle differentiation (you may have noticed their faster "on" speed and higher visibility in brake lights).  They are now increasingly being used in virtually all automotive signal lighting, including stop/tail, backup, rear fog, mirror-and front-mounted turn lamps, as well as interior lighting.

With the development of white LEDs, forward lighting applications were inevitable.  On its new R8, Audi seems to be the first to use LEDs extensively in headlamps, for the low and high beams, as well as the front turn signals and DRLs (Daytime Running Lights) – all contributing to the unique appearance of the vehicle.

(click on picture at left to see animation - source: AL Lighting)

 

Lexus is also using LED headlamps on its flagship LS600h projector design, and Cadillac has announced use of complete (high & low beams, turn indicators) LED-powered front units on its 2008 Escalade Platinum Edition.

LED Street Lighting in Ann Arbor (read on)