Strategies for small-to-mid-sized organizations
“I like to think that we can run between the giants’ legs,” says Wixon Inc. president and co-owner Peter Gottsacker. Survival for a privately held company in a landscape increasingly defined by consolidation means working smarter and cultivating personnel. But while this Midwest company’s scale is comparatively modest, it’s leagues beyond its humble origins.
Around the turn of the last century, Charles Franklin Wixon operated a spice cart in Chicago. This operation was the seed of what would become, in 1907, the Wixon Spice Co. Over the next 100 years, Wixon changed hands; moved north to St. Francis, WI, home to a multi-building campus including more than 300,000-square-feet of manufacturing, R&D, packaging, warehousing and administrative facilities; grew its flavor capabilities to address the increasing health demands of consumers; expanded its staff to over 200; and achieved sales of over $50 million. In 1996, after a decade in the pharmaceutical industry, Gottsacker joined Wixon. In 2004, along with partners Chuck Ehemann and Peter Caputa, Gottsacker acquired the company.
The “R&D Engine”
If Wixon has a motto, says Gottsacker, it’s, “Get a mile deep instead of a mile wide. If we’ve got one good customer, let’s make sure we understand them and who their customers are and put people into their facilities and understand what their projects are and what their keys to success are.” Being everything to everybody is distinctly not a priority.
Fueling that philosophy is what Gottsacker calls Wixon’s “R&D engine”: a core of about 20 flavorists and food scientists that have been cultivated to spur “significant growth in the future.” This engine is designed not only to keep the company ahead of trends, but also to develop new flavors, seasoning systems and compounds for the industry, in addition to addressing the health and wellness concerns of the food industry down the road.
Health: “We knew that salt and hypertension and reducing salt were going to be issues a long time before this current wave,” says Gottsacker. To this end, Wixon has developed the salt substitute KCLean Salt, which reportedly contains half the sodium of table salt. “That’s currently being formulated in some of the largest brand applications in the country,” Gottsacker adds.
Childhood obesity is another health crisis opportunity Wixon is tackling; says Gottsacker, “We have another technology that adds that sweetness without all those calories and is being looked at in major food applications for children.” In recent years, the company has used its Mag-nifique flavor technologies to help their customers lower trans fats, sugar, sodium and other troublesome ingredients. In these ways, Wixon seeks to stay nimble in an environment of increasing industry consolidation.
Part of Wixon’s continued success lies in its ability to evolve along with the food industry. “We have lived through the Atkins diet,” laughs Gottsacker. “We had a significant portion of our sales in bakery and bread, and when the Atkins trend came out, our bread business, which was $7 million worth of business for us, literally dried up.” Yet, the company’s diverse competencies—part of what Gottsacker describes as Wixon’s “critical mass”—saved the day. “We had significant exposure in the meat/protein industry,” he says. “Of course, as people were coming off bread, they were saying, ‘Meat is great for you.’ So we were able to offset a lot of that by pickup over in the protein side. Diversity certainly helps us smooth out some of those bumps in the various industries.”
Gottsacker views Wixon’s key strengths as its family atmosphere and investment in people. As a company located far from the industry’s east coast center, Wixon has found that it pays to empower staff. “We understand as a company that people are the key ingredient for us,” says Gottsacker. “And we continue to get them challenged. We’ve got two of our people going through MBA school; we’re paying for it.” The benefits, as Gottsacker sees them are twofold: first, the employees feel challenged and second, these people get more involved in the industry and are thus able to “remain on the cutting edge.”
Gottsacker says that Wixon’s private status means that the company doesn’t labor under a “mandate for growth.”
“We can take a more pragmatic approach to growth and invest without having to worry about quarterly growth statements and analysts thinking twice about why we’re putting resources into [certain] areas,” he adds. Instead of trying to meet external expectations, Gottsacker says, “We’re looking at things to grow within what we think we do pretty well.” Wixon’s growth strategy is focused on a natural process, one derived from its centralized layout. “We have a single campus here,” says Gottsacker, “so communication [is direct]. The owners are in the lab right next to the chemists formulating.” Growing too fast or spawning far-flung locations would erode this, he explains. “We’d rather grow organically on this campus: one location, one campus and one company.” Any expansion, Gottsacker says, would have to fit Wixon culturally, and meet its strategy of developing new technologies and flavors. “
Our size will actually serve us very well in the next five to 10 years,” says Gottsacker. “We need to be quick to the market. I think we have good technologies, great flavors and systems to bring to those people.” In addition, he says, it’s important that the company move faster than its competitors (“running between the giants’ legs”) while developing the human relationships, which is a hallmark of smaller companies. “With all this consolidation…people think they buy facilities and I think the big mistake they make is that all of this tremendous talent pool gets laid off because of a thing called ‘synergies.’” Gottsacker sees layoffs of talent as a major mistake in the industry. “Those talented people are truly the business,” he says. “They [the talent] will bring good ideas and relationships to Wixon as opposed to plants and equipment that at the end of the day probably don’t serve this industry very well.”