Telstra Business of the Year 2014 winner Redarc shares its winning strategies
Anthony, 49, and his wife Michele bought Redarc in 1997. They raised funds by mortgaging their house, selling the family car and borrowing $100,000 from Michele’s family. The company had one line of products, eight staff and falling revenue.
Today, Redarc employs 100 people, has an annual turnover of more than $25 million and exports to eight countries. Its product range includes portable solar units, battery systems, converters, gauges, equalisers and specialist electronic safety equipment for the trucking industry.
A man with a plan
Redarc’s spectacular growth over the past 17 years has been fuelled by a series of highly ambitious five-year strategic plans. As a passionate marathon runner, Anthony believes that companies can only achieve such results if they always push themselves to the edge; he calls these corporate goals “stretch targets”.
Planning is part of the company’s DNA. “I guess I’ve always been driven by goals. I have a fear of failure,” he says. “So it’s about where are we now? Where do we want to get to? And how are we going to get there?”
Apart from creating a pleasant, modern environment, Redarc has abolished the repetitive tasks normally associated with manufacturing – most of this work is now done in a sealed, dust-free unit called the surface mount technology (SMT) facility.
In fact, the Lonsdale plant upends most of the stereotypes about factory work. It’s calm and collegiate. In one section intense young men, surrounded by soldering irons and diodes, are designing motherboards. Elsewhere a team of women stand at a spotlessly clean assembly bench.
The MD stops for a chat with Johan Otto, the man who presides over the SMT facility – a series of whirring machines churn out complex circuit boards. In 2015, $4 million will be spent expanding its production and capacity much of it will be spent in here.
The two men study a detailed workflow chart. “We’re booked up with orders for the next eight months, so I’m pretty happy,” says Johan. “It’s a full inventory.”
The business mantra at Redarc is to always strive for continuous improvement, even in the smallest detail. In the fast-moving world of electronics complacency is death. “So how much money are you after, Johan,” Anthony asks. “$1.8 million? We’ll see what we can do.”
At 15 Anthony Kittel announced in class that his ambition was to become a company director. The declaration generated howls of laughter. But the youngster with a passion for AFL, cricket and running was deadly serious.
“When I made that choice back then I knew what I had to do, to achieve my goal,” he says.
Both of Anthony’s grandparents ran their own small businesses and since the age of 12 he had been spending most of his school holidays helping out at Fred Teague’s service station at Hawker, in the state’s north. It was a punishing regime for a kid still in short pants.
“We’d be in the garage at 7am sharp and finish at 6pm,” he recalls. “It was six days a week and occasionally on Sunday morning – or if someone knocked on the door at 11pm at night.”
Apart from serving, Anthony also fixed tyres, looked after general administration and did the banking. While the extra cash was welcome, the aspiring tycoon also learned some important lessons about customer relations.
“Fred was a pioneer of the Flinders Ranges [National Park],” he says. “He had been there for 50 years and had an intense knowledge of the area – he’d help people to find a peaceful camping spot or somewhere to paint.”
These early experiences in Hawker form the foundation for Redarc’s “customer is king” policy which ensures that its customers receive the very best after sales care possible – even if their product is out of warranty. “It’s going that one step beyond what the customer would expect,” he explains. “That’s how you treat them as king.”
Business commentators are often struck by Anthony’s optimism about the future of Australian manufacturing. With the demise of the Australian car industry and a cloud hanging over the defence sector, he can often sound like a voice in the wilderness.'
Having trained as a mechanical engineer with BHP and later undertaken an MBA at the University of Adelaide, Anthony is a happy combination of pragmatist and visionary. For him, every obstacle is an opportunity.
“One of the biggest issues facing us is our cost of labour,” he says. “Land tax is too high, so is payroll tax. But you can use all of these factors as excuses. Ultimately we’re about doing things faster, smarter and with more agility.”
Anthony points to one of Redarc’s latest products, the Tow-Pro, as an example of how this culture of innovation can reap practical results. The system, which links the braking system of a vehicle and a trailer, caravan or boat, was designed so that it can be made with minimal labour.
“We’ve come up with a simple, three step production process,” he says. “That means making an innovative product for a price people are prepared to pay.”
As Redarc moves into the consumer market, it has embraced both conventional media and social media. In 2009, Redarc entered into a partnership agreement with television program Pat Callinan's 4x4 Adventure. Sales have boomed.Redarc has been equally adept in seizing social media opportunities in opening a dialogue with customers to create brand awareness.
"Ultimately, we want to delight the customer," he says. "If we design a product such as a remote power source that keeps beer cold, then they are going to ask for our brand by name. That's what we're after."
“Redarc ran a competition in conjunction with Pat Callinan’s 4x4 Adventures. Our Facebook was exposed to over 234,000-plus people. This boosted our following from 1050 to 17,218 in less than a month. That’s a 1500 per cent increase!
"The most important lesson is creating passion for knowledge and a team based culture of encouraging staff to undertake lifelong learning."
Video interview transcript
Anthony Kittel: "It was one of those moments where you’re in class as a 15 year old and put your hand up and say I want to be a company director and the rest of the class laughs and thinks ‘who is this guy?’. It is different. But you know, I think it is good they can make up that career choice early in their lives. Because it certainly gives them a lot clearer direction and so when I made that choice back then I knew what I had to do to get to achieve my goal."
"The learning and development I undertook as an individual was always with that preparation in mind. So in our business every five years we have a strategic plan. And that plan is about setting four or five major goals for your business. Things that are a little bit of a stretch target but ultimately if everyone commits to the task you can achieve them. How we can be world competitive? What that next new group of products might be? How we can enhance the experience for our customer? And so we write down those goals, we communicate it with our staff; everyone gets to participate in them. And then what happens, cascading down the business from those goals, are a set of KPIs that each and every quarter we can review. So it’s three monthly reviews of a five year strategic plan. So you’re able to put in down into bite size pieces."
"If you set yourself goals and make sure those goals are achievable then once you start to achieve some of those goals you start to stretch the goals. Obviously, if you’ve got that internal passion it makes life a lot easier but that’s the way I work with my staff – setting goals that are achievable, making them bite size goals not too big that they can’t see the trees from the forest. It’s about building an innovation culture, having our staff think about a particular problem and what you can do to overcome it. I think you learn most from people who have been there and done it and I really practice that in our business. We offer mentorship to all our staff and we have an expert who mentors in each of our different core areas, such as in marketing or in manufacturing or in quality. We’re always looking at how we can improve. And even myself – I’ve still got mentors today and still want to have mentors as long as I’m in business. Because I want to be challenged. Because my view is that unless we’re learning and growing we’ll become a liability."
"To achieve an innovation culture you need to have the very best people. You can spend everything you like on new equipment or new processes but unless you have the very best people you’ll never achieve it. Obviously investing in the latest technology is very important and I see particularly in manufacturing a lot of companies aren’t prepared to reinvest. In our business every three to five years we want to be replacing that particular piece of equipment with the latest so that we can keep enhancing our quality and growing the product offering for our customers. And the other part of innovation is developing these great new products and so committing to R&D is essential. We commit roughly 15 per cent of our sales revenue back into new product development."
"When I was younger, working in my grandfather’s garage, customer service was something that he really outlined for me. So in everything we did we wanted to make sure the customer would have fantastic experience in dealing with us. That came from the technical support, it came from product warranty: no questions asked. How can we make the customer experience with a Redarc product second to none? The most common ones were the four wheel drivers who want to go travelling around Australia or out into the bush. They always come back to us and say ‘don’t worry about everything else, but I’ve just go to keep the beer cold.’ So it’s designing products that can give them battery capacity and power that they can stay without power – but most importantly they’ve got cold beer in the esky."
Photography: Mike Smith