Episode 277: Keys to Building a 400 Product Manufacturing Powerhouse with CEO of East West Manufa...

Welcome to this episode of the Million Dollar Mastermind. I'm Larry Weddell. And before we get started, if you want to know exactly how to win again and again, go to Wydell on winning.com webinar now to watch something I've put together for you. Now let's get going into this episode of Million Dollar Mastermind.

I am here with Scott Ellison. He's co founder CEO of East West Manufacturing. Annual revenues of the company are.

Let's see.

I don't even have those figures.

We're, we're closing in on half a billion.

Oh, billion.

Okay.

I've got a B instead of an in there. So closing in on half a billion and global manufacturing. China, Vietnam, India and Costa Rica.

Canada.

Really?

Yeah.

And, and so do a lot of traveling in normal times.

Yeah, normal. My hundredth trip to China was back in 2011 and I stopped counting. But yeah, we, we've got, I like to visit our sites as much as I can and we've got, we've got eight fully owned factories across the globe and a whole bunch of offices and yeah, it's. I took a little break from COVID Haven't been outside the country actually I did do a couple of trips to Canada, but things are starting to pick back up and I'm starting to get back on the road.

Yeah, you know, they used to say the footprints of management were the greatest fertilizers for business. But I think that changed somewhat here in the last year or somehow businesses have been able to keep going. But special challenges when you're business is scattered around the globe. How have you guys, how, how have you responded? That might have been unique.

Might have been unique. I mean, I think, you know, we were fortunate that the vast majority, you know, of the products we manufacture are essential for business. And so we had to keep the plants running, keep the supply chains moving. I think our teams just did a great job of making sure the facilities were safe and our employees felt safe, you know, and I think we did a good job keeping our culture and our collaboration going as best as we could through all this. And I think if anything's unique is, you know, we're able to grow the company, continue to grow the company at a healthy clip through, through Covid. Our five year growth rate is still over 40% a year and we're going to do it again this year. And we've been buying, we completed seven acquisitions in the last four years and we're working hard to integrate those businesses and get on the same page as far as Culture and purpose. And we've been able to do a great job through that as well, through.

The COVID And now let's talk about scale, how many? Let's run through those numbers again. You know, countries, factories, the overview, employees, moving parts in this thing. I don't want to get you depressed about what you got to keep up with, but it would help to get.

An overview of it. Yeah, we're right around 3,000 employees globally. We've got, I don't know, professional staff, has to be, I don't have a recent number, but it's, you know, probably 500 or so. And then salaried staff and then engineers, 125 engineers in the company. We've got eight facilities, fully owned facilities, and we operate. We have operations in 14 different locations. I don't know how many countries that is anymore. Probably, I guess probably seven or eight countries.

The moving parts, you know, people would look at. And product lines. How many product lines do you think of? Do you break your things up like that or.

I don't. I mean, I know we've got north of 400 customers and we focus on products that we think make the world a better place and improve our lives. And we've got several hundred products that would fit that definition. And for us, that's things that make the world smarter, safer, healthier and cleaner or greener. So we take on energy saving products and technology products. Medical is a big category for us. We were doing a lot around Covid last year with ventilators and respirators, oxygen dispensers. But our core products are we do a lot in air conditioning, a lot in robotics, and then we've gotten into health and fitness. So we're making some pretty high end exercise equipment for virtual training in your basement, things like that.

And would we know any of those brands?

You would, you definitely would.

Okay. And so the thing is, as you go through it, like, let's just look at the last year.

How do you.

You know, you talked about not only surviving, but growing during that time and people will look at a position that you're in and say, lord, how would you do it? But I'm guessing you basically do it one day at a time, one issue at a time, and try and work through things so they don't come up again and use it to improve. How did you, how do you describe that process?

I mean, a lot of it comes down to the kind of the culture of the business. One of the things, I mean, there's several fundamentals, I guess that We've tried to incorporate into the business from the day, you know, I started the business 20 years ago, which is five people. You know, it's thinking about, we wanted to create an environment where it's safe to make, to take chances and to make mistakes, but also a company where when mistakes are made, those are seen as opportunities for us to get better and stronger and really differentiate ourselves from the competition. And so there aren't a lot of companies that I've been in and where that's the case, but we, you know, maybe if I'm an entrepreneur, I want everybody else here thinking also like they're an entrepreneur and the owner of the business and thinking about how we can become a better company all the time.

And how does that play out in real life, how you empower your people and that, that type of thing.

So the big things you're looking for is alignment, you know, across the organization. Make sure that expectations, you know, start. There's, there's a whole process you gotta, you gotta create. Well, where are we all headed? You know, what are we trying to accomplish? And then let's, then let's, you know, we get that really clearly defined. You know, what does our 10 year vision look like? What does our 3 year vision look like? What, what are we going to look like in three years? And then, you know, and that's across all kinds of functional areas. Is it, you know, what's, what's our revenue going to be, what's our margin going to be, what's our, our customer profile going to be, what's our infrastructure going to be to support that, what kind of company are we going to be to come to work for? And then, and then let's break that down even further into what are we going to get done this year to make that happen and who's going to be accountable for each of those things and what tools do they need to make that happen? And then once that is, once that's done, and we do this every year in terms of creating the strategy for the year and defining all the, we call them rocks. A lot of this came out of the book Traction. It's called an EOS system, Entrepreneurial operating system. And so that gets defined and then each of those activities gets assigned to a person and they're held accountable to. It goes into their, what we call their quarterly performance report. And they get to report on the status of those key initiatives every quarter to the whole company. And then they meet with their managers on a regular basis, but that everybody gets reviewed quarterly. Where Those initiatives get discussed and prioritized.

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How did you come to get a clear idea of the culture you wanted to create 20 years ago? That had to somehow happen before you started this thing. You, you had to be going through some experiences that got you thinking about the right way to build a major global corporation, what it turned into to get the fundamentals right.

Yeah, seeing what works and what doesn't work. And I was fortunate enough. My first job out of college, I worked for a company that was very entrepreneurial. They had invented disposable, minimally invasive surgical instruments down in Miami. And really fast growing company, they licensed that technology to Ethicon and Boston Scientific. And they, they, they started just receiving huge volumes of orders quite quickly. I was in charge of manufacturing for their biggest product line, which is their Bioc Force line. So that gave me an exposure to really kind of. They were in a high tech company and they were kind of a cool culture for that period of time. And, and so I left there to become a global strategy consultant for PricewaterhouseCoopers. And I spent 100% of my time traveling and meeting with big companies.

How did you qualify for that job? What led you to that job?

Yeah, so this is back when supply chain was a new term, back in the early 90s. And they were looking for, you know, first of all, folks that could travel a lot, but also engineers with a lot of them with MBAs that could understand both the business and I think my, I was always, I was anal. I've always been analytical implementer and change manager and, you know, trying to help incentivize and encourage folks to lead teams and to get things done. And so when they hired me on their supply chain group, my job was to help companies optimize their supply chains to think about where is the best place to manufacture this product, where's the best place to have a distribution center, how best to set up our distribution centers across the country. And often in my role in that was to really be on the ground helping the leaders of those companies think about how to develop the plans and implement them. And so that was really incredible experience at a young age. But I also got to see a variety of different cultures in businesses. And to be honest, a lot of times I thought, geez, if these guys can make money and be successful, I've got a chance of doing this myself. I learned a lot about what not to do as well as what works. And so that was great experience because I got to be in and out of a lot of companies over a very short period of time.

Well, when you get into companies as an outsider, a lot of times you're not that welcome, but the big guys who are making the decisions, they've got to welcome you because they authorize you to come in.

Yeah. So when they pay as consultants for PwC, they pay you a lot of money to. Yeah, you know, it's high pressure. Yeah.

And but I guess when you, once you get in the door, you're talking to the people who work for these people and the corporate decision making level and I guess you find out, you know, the CEO is going to, has a vision of how things work. Kind of like a general, you know, and they, a lot of pontification. You know, in our business we, we built organizations and it was people are always wanting to hear from the most successful, fastest growing current leader. And you'd bring them in and they would talk. Well, in our organization we do things this way. And I always got a big laugh out of that because I had one of the biggest organizations and I knew nobody did anything the way I told.

Them how to do it.

You know, it'd be like in kindergarten level. Yes, they do it the way you're telling them, but once they get on their own, they've got the fundamentals down. If you give them the freedom and you give them the opportunity, they're going to develop their own stuff. And they might, you might think they're doing things the way the presentations, the way you told them and all of that, but they're going to be evolving constantly.

Yeah, that's right. I mean, you know, I learned early on that if you treat folks, employees like, like adults, they're going to act like adults. If you're going to treat them like, micromanage them and treat them like, like adolescents, they're going to act like adolescents. And so giving folks the freedom to think and create and improve that you want to leverage that brain power across the organization. And so early on back to when I was working for that medical device company down in Miami. My first responsibility with them was to go out on the floor and look at the assembly lines and figure out ways, because we were growing so fast to see that, ways that we could drive efficiency across production lines. And so the first thing I did is I sat down, the assembly line would have, I don't know, 20, 20 or 25 stations on it. And so I went to each station, starting at the beginning and said, hey, I want to understand what you're doing. Show me your, your job, what it is, and teach me how to do it. I want to be able to do it myself. And so I'd spend, you know, an hour or two learning what they're doing. And then typically I would say, well, what do you have any ideas on what we could do to make your job easier, to make it faster, more efficient? You know, any wasted activities you're doing that we could, we could work on? And it was amazing how much once, once they knew I wasn't threatening to them, that I was really there to help, how many ideas that they just started free flowing. And, you know, and I'd work my way down the line and inevitably I'd hear somebody say, well, you know, every, every, you know, 20 minutes I got to get up, I gotta walk to the other side of the room, I gotta get this hard and bring it back to the line, you know, and that's really inconvenient. And I would say something like, well, what if we just got that and moved it right next to you so you didn't have to get up all the time? Time. And they'd look at me out of amazement like, what do you mean you can do that? And I'd be like, I'd be like, well, yeah, we can do that. And so next thing I knew that everybody was engaged on the line to figure out, well, how can we improve together and share ideas and get stronger? And it wasn't mine. All I did in that was I was just an enabler. And it was all the brain power on the line of the folks that were doing it day in and day out, that was really where the power was. And so I learned that early on that if I can create that in an organization where everybody felt like they were free to share ideas and how we can make our organization better, and not only that, that they understand how they could succeed, how that success also translated down to them, how they could be part of that I thought was, would be hugely powerful. So that's always what I've tried to create in East West. We're a transparent company. We share our performance across the organization. Everybody knows how we're doing, how they're doing, and how they benefit from the success of the company, and also what they need to be doing if they want to grow in the organization, what things they need to be working on, and what that path could look like.

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