Search This Blog

Monday, June 28, 2010

Business Lessons from McKnight Guitars

We have, I believe, much to learn about business from a tiny luthier in the middle of nowhere. What he and his wife are doing right affirms some of what we're already doing and could teach us a thing or two that we're not. First a little background...

I picked the guitar back up at age 44 after not having played since high school. It started at Henry Horton State Park during a management retreat. In the unofficial hospitality room I found my soon-to-be good friend Gabe Wicks playing and passing around his Martin guitar. People were taking turns, so I took one. It just felt right, not necessarily the instrument, but the sense of community and camaraderie. Instruments can be pleasant fill-ins for the solitude of introverts and many of them become superb players. For me the instrument is the focal point around which we've built a tight community of friends.

Vonnie and I took this one step further this past weekend and traveled to Morral, OH, allegedly population 325 although I think that count was taken on a family reunion weekend. We were there to spend time with Tim and Mary McKnight of McKnight Guitars, the people who built my first serious guitar which I purchased off consignment from Artisan Guitars in Franklin, TN. I had met Tim via email and an acoustic guitar discussion board, and had invited he and Mary to Nashville for one of our local musical trade shows. They reciprocated with this invitation to their home for their annual homecoming of guitar owners. Tim is a quality control engineer by trade whose been promoted to running the stamping department of a major appliance manufacturer.

They were hosting their third annual "McJam" where about 20 or so McKnight owners, family and friends drive in and spend the weekend at their home or one of a handful of small motels out by the Interstate. For two days we ate, talked, played, ate, played some more, ate, and toured Tim's shop. He had some tweaks to do on some members' guitars so we also got to watch a master luthier at work. We also ate a little more.

I was surprised at how little we played. I was equally surprised at how much we talked. Three members had been inspired to take a lutherie class and build their first guitar. Tim and Mary set aside considerable time in such a short event for them to speak at-length on their projects. The McKnight home is in a modest neighborhood, but there were multiple spaces set aside for groups of 2-5 to sit and talk. Tim had about 10 of his display guitars available for anyone to play.

Now here's where it gets interesting (I know you were waiting for that!). During one conversation in one alcove Mary told Vonnie that they seldom sold on consignment anymore. She also said that the main reason they attended one trade show in Nashville was to meet me. Huh? I had already purchased and they don't do any after-market selling or customization, so why make a 10 hour trip to Nashville when my check had already cleared? Because they wanted to meet one of the few customers whom they did not know personally.

During unstructured downtime in the weekend's agenda, when people would be playing these high-end custom display guitars, Tim would come sit and watch us play. He would ask questions about how we played, what we liked and didn't like about the guitar we were playing, and get our feedback on projects he might be considering. He had one experimental guitar that he asked everyone to play during Open Mic Night on Saturday. He sat in the chair closest to the performer and watched, listened and asked questions of every player about the experimental guitar.

So what did I learn? I learned how McKnight Guitars has gone in just a few years from a garage hobby to being one of the premiere guitar builders in the nation (they just made a specialty guitar for the Newport Guitar Festival in Florida and the $15,000 it sold for went to charity).

1. An obsessive, relentless focus on quality - There are lots of people building guitars, but very few that build them this well. I have an early prototype that is very special (just ask my friends who've played it), but that was built in 2006 and isn't anywhere near as well made as the McKnights of today. I bought it on clearance (again, no surprise to my friends) because while it hung in the shop Tim had moved on to better ways of building.

2. An equally obsessive, relentless focus on the customer - What does the customer want, how does the customer use the product, and what does the customer think about potential innovations is an on-going and constant part of the continuous improvement and re-engineering of the product.

3. A Sense of Christian Mission - The McKnight Guitar tag line comes from Psalms, "Make a Joyful Noise"; the McKnights very much place God at the center of their business and feel committed to the business as an extension of the Christian mission.

4. Building the Business through Building Community - Tim and Mary appear to have used consignment selling to help draw attention to their tiny company early on. They now sell and want to always sell face-to-face, builder to customer. McJam continues that strategy as attendees are invited to bring a sleeping bag and stay in the McKnights' garage, loft, or bring a camper or tent for the back yard. During the event hours (noon to midnight) you're invited into their home to eat at their table and meet their whole extended family.

5. Premium pricing - They make one of the best products on the market and they don't give it away. Margin allows for service, which is why service suffers most in commoditized industries. They can charge what they do because quality, and community, differentiate their company in the marketplace.

What does that have to do with a big business like Thomas Nelson? After all, the size and scope and industry are entirely different. Right? Yes, but the lessons are the same and here's how we're doing.

We are doing very, very well on building community. Michael Hyatt's leadership at building community through social media, supported by Lindsey Nobles in Corporate Communications, is innovative and being echoed across our marketing team. We're also doing well in some business units, like Fiction, at listening to customers either directly or through the sales division and letting what we learn inform what we publish. Other business units should take on this strategy. Our publishing standards, focused around the company's core values, has resulted in products faithful to our mission. This is an area of great improvement since 2006. Our digital efforts and focus on custom product make us one of the more innovative publishers in our space.

Where we and so many publishers could improve is in product quality. How many times have I heard over 9 years in Christian publishing that "mistakes happen". "We publish a lot of books" is often the explanation for spelling and grammatical errors, not to mention some poorly written products. The lack of product differentiation due to quality, especially in a commoditized industry like publishing, shows up in unit margin. Let me say that again! When our stuff is the same as everyone else's stuff then we can only compete on price which in turn causes corners to be cut and quality to diminish. When we play the commodity game we lose, and so does the end user.

Think about publishing differently in this way: print will eventually die except for high-end products. Digital products will be the commodity as they will be cheap and cheaply customizable. When paper is no longer involved then the quality of the content and how well the content fits the consumer's need become the only measures of product quality. Pushing quality as an uncompromisable metric will allow for premium pricing on the few printed products still made ten years down the road. It will also minimize lost sales and damaged brand equity from digitized commodities.

We should learn from the little luthier in Morral and start now building a quality system that will differentiate us in the future. Unless or until we do, we as individuals can make a difference. An old-tech concept of "pride in our work" can be an important first step.