09Sep2009
How Kahiki Sailed Through The Perfect Storm
IT WAS MAY 2005. Kahiki Foods had just moved into a 119,000 squarefoot facility more than five times the size of its old plant. Business was strong.
Then, along came the perfect storm. At the new plant, there were cost over-runs and cash flow problems. Machinery that had worked at the old plant just three miles away suddenly didn’t work anymore. Drains didn’t drain. Shipments were being shorted. Inventory was a mess. In the middle of all this, Michael Tsao, the visionary entrepreneur who had built the company into a huge success, went on a brief vacation to get away from the stress. On the last day of his vacation, July 22, 2005, he died at the age of 55. Alan Hoover, then head of sales and marketing and now President & COO of the company, was named Interim President.
Tsao had emigrated to the U.S. in 1968 at the age of 18, with $100 in his pocket. His first job was as a dishwasher in Los Angeles, but his work ethic and vision quickly led him to become the general manager of Trader Vic’s in the Beverly Hilton. In 1978, Tsao moved to Ohio and became part owner of the Kahiki restaurant, one of several ventures that thrived under the entrepreneur’s leadership. Kahiki evolved into a spectacularly successful frozen food company. In 2004, it had the highest percentage gain of any publicly traded stock in Central Ohio, rising over 190% for the year. A year later, all that was in serious jeopardy. Here’s how Alan recalls that time, and how the company rallied.
What was it like right after Michael died?
We were in crisis mode, we had a burning platform. I got the staff together and said we have to honor Michael and ensure that his dream lives on — but deep down I knew we might not make it unless we made big changes. At one of the first senior staff meetings, our CFO asked “Have you ever read the book, The Goal?” (The Goal: A Process of Ongoing Improvement, by Eliyahu Goldratt and Jeff Cox.) I hadn’t, but it was a good, quick read. I dusted off a copy of Lean Thinking (Lean Thinking: Banish Waste and Create Wealth in Your Corporation, by James Womack and Daniel Jones). It had been given to me by Michael Renna of Michael Angelo’s years before. I re-read it and decided to buy 25 copies for senior staff and midlevel managers. After that, we read The Toyota Way as a group.
What happened next?
We started meeting regularly and discussing the books, in what we coined “Kahiki University.” Slowly, we began seeing improvements, and those books were the catalysts. They led us incorporate Lean Six Sigma principles. Two years later, I met a person from Milliken & Company, a textile and chemical firm based in South Carolina. They began working with us on a monthly basis, teaching us the Milliken Performance System (MPS). It is an absolutely amazing management system. The way they run their business is so impressive. I’ve taken eight delegations of Kahiki associates down to Milliken to expose them to MPS and their world-class operations. About half our work force has visited Milliken since, learning new ways to improve quality, safety, reduce waste, improve reliability, and build teamwork. We have made substantial gains working with Milliken. Food industry people have asked me, “What can a frozen food company learn from a textile company?” I always tell them, “plenty”.
Google ‘Kahiki Performance System’ and you get nearly 12,000 hits.
People started hearing about our success. We’ve had visits from several companies, including one from Sweden. They have wanted to see the Kahiki Performance System (KPS) in action first-hand. I’ve also spoken to MBA classes at Ohio State’s Fisher School of Business about KPS. From not nearly making it to attaining success in about four years — it’s a pretty remarkable story, how we got here.
