The lovable loose cannon and the analyst - Company Business and Marketing

Communications News, August, 2000 by Sean Kelly

Crystal Group charges into a growing market.

In 1996, Crystal Group was running out of room. The Hiawatha, IA, manufacturer of rackmount industrial computers was growing so rapidly that the only place to house the additional staff was the company parking lot.

"We got so large so quickly in a facility that was small," says founder and CEO Craig Jensen. "that we had to move our shipping department out into the parking lot--so that we could manufacture inside where the shipping department had been. Rain became a big factor in the production schedule."

"We kind of blew the doors off the business in 1996," adds Curtis Nelson, the company's president. "We grew from $4 million to $10 million in one year. We were due to get into the new building at Thanksgiving, but before we could get into it. we outgrew the old one. For about 3-1/2 months, we used the parking lot.

"People had to have numbered parking stalls, because we measured the sizes of cars--we knew exactly what cars would fit where, in order to get all the cars in and still be able to use the parking lot."

Business is anything but tight these days for Crystal Group, which reported revenues of $20.8 million in 1998--an increase of 1,184% since 1994--which landed the manufacturer on the Inc. 500 list of the fastest-growing companies in the United States for the third straight year. Crystal has come a long way since Jensen started out designing industrial PCs on a tabletop in his dining room in 1987.

"I had to figure out a way to feed my family" after leaving another company, he says. "I went into business as an electronic consultant." The business he started in his home, Emerald Engineering, worked with a company that was later bought by MCI. In 1991, Jensen formed Crystal Group, a sister company, to manufacture and market specialized industrial computers to the telecom industry. The two companies merged in 1996, one year after Nelson--who met Jensen while they both worked at a scoreboard business company from 1982-85--joined Crystal Group.

In the past decade, Jensen has seen tremendous change in the industry. In the early 1990s, for example, Crystal was one of the first attendees of a telecom developer convention held in Dallas in the early 1990s. "It was done at the airport--40 people at a tabletop show. If I had been smart enough to go buy 100 shares in every company that was there, I wouldn't have had to start my own business."

LOSING MONEY NOT PERMITTED

While the telecom field has changed drastically since Crystal Group began, Jensen's basic business philosophy has not.

"Making a profit," Jensen says was his business strategy when he started Emerald in 1987 with $25,000 in contract money from a previous job. "It was always self-funded. I never gave myself permission to lose money. Curt is an owner because he brought to the company knowledge and an ability that I don't have."

As to his early managerial attitude, Jensen says, "I was a loose cannon. I couldn't function well even in the smallest amount of structure. I was constantly in everyone else's faces, trying to get them to fix what I felt was wrong with their department, or their company, or their way of doing business. It took me a while to realize it was their money; they could do what they wanted."

Has Jensen's managerial style changed, now that he runs a multimillion-dollar company with 100 employees? "No, I think people here would describe me as a loose cannon, but a more lovable one," he says.

"He got older," adds Nelson, who is the more analytical of the pair.

"Curt and I agree on almost every aspect of how to manage a company, and we spend a lot of time making sure that we don't fall into the same traps that we see other companies falling into," says Jensen.

"One big trap is letting a CFO run the company," he continues, adding that CFOs are hired when company leaders "refuse to take control of profitability and want to abandon that responsibility. Most people bring in an accountant or CFO, and his first action is to make everybody justify what they want to spend. Well, a CFO has no idea whether or not the money that an advertising department wants to spend--or a production or engineering department--is justifiable.

"The only things he can look at are the numbers. We have come to the conclusion that we are smart enough to understand when one of our directors says he needs something, to look into his analysis and go with our feelings."

"We've run the company very, very responsibly, financially," Nelson adds. "It's just that we run it from the customers' side first instead of the bottom line first. The bottom line comes because of the way we've run the company, not in spite of it."

Another facet of Crystal Group's strategy is a sales approach that focuses on what a company needs.

"We start a sales call with, `Tell me about your business,'" Nelson says. "Customers traditionally say, 'Tell me what you have, and I can see what will fit.' Our response is, 'Tell us what you need, and we'll see what we can provide you.' You really have to understand the needs of your business. If we have something that will fit, we'll suggest it. If we don't, we'll suggest whatever we think we need to build. We work with the engineers and the technical people who develop the infrastructures and work out a solution that fits their needs."