Member of the Executive Board (Vorstand), Jowat SE
"Best Managed Company" Dr. Terfloth - Vorstand der Jowat SE - im Interview | Dr. Pero Mićić
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Best managed company! Diesen Preis hat dieses Unternehmen schon zum dritten Mal in Folge erhalten. Was steckt dahinter? Und wer steckt dahinter? Die Jowat SE ist einer unserer Klienten und hat sich in den letzten Jahren hervorragend entwickelt. Jowat ist ein deutsches Familienunternehmen und ein echter Hidden Champion aus Detmold. Es gibt einige sehr interessante Details, die Sie von Jowat für Ihr Unternehmen lernen k...
Transcript (31 segments)
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Interviewer0:00
Best managed company, this company has won this prize for the third time in a row. Who is behind it? What is behind it? Jowat is one of our clients and has developed excellently in recent years. Jowat is a German family-owned company and a true hidden champion from Detmold. There are some very interesting details that you can learn from Jowat for your company, and Jowat is a good proof that the industry in Germany, Austria, and Switzerland, and also in Europe, will continue to have long-term and solid global reputation. I spoke with one of the board members, Dr. Christian Terfloth, about how he, together with his two board colleagues, has made Jowat a future-proof company. At the end of this contribution, I will summarize the most important findings for you so that you can apply them to your company. Dr. Terfloth, I know Jowat as an adhesive specialist with over 650 products for every conceivable bonding need in craftsmanship and industry. Founded over 100 years ago and today with 1,200 employees, you are active at five production sites with 23 subsidiaries and in over 80 countries worldwide. Many of today's production processes for furniture, food, building packaging, filters, and vehicles would hardly be imaginable without Jowat's sustainable adhesive technology. How would you describe Jowat, the company that you and your colleagues lead?
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Christian Terfloth1:31
We are a medium-sized family-owned company, where the term 'Mittelstand' is defined from a German perspective; one can already be relatively large for that. We have 1,200 employees worldwide, and in the past calendar year, we generated approximately 400 million euros in sales, producing over 100,000 tons of adhesives. So, we are a manufacturer of industrial adhesives that has been very successful in its markets for decades and can report steady growth. In this sense, this is our pleasure, our passion, and our success.
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Interviewer2:15
You are a doctor of chemistry. How did you come to your current task of leading a larger medium-sized company?
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Christian Terfloth2:22
I entered the then Jowat as an assistant to the management, working for the technical managing director, and then three years later, in 1999 I believe, I took over responsibility for research and development, and since 2003, in the restructuring of the corporate group under the umbrella of the public limited company, I have taken over overall responsibility worldwide for research and development, application technology, purchasing, and management systems, and I am still doing this today, my 20 years, which is also the duration over which many other hidden champions are led.
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Interviewer3:17
How much has Jowat grown since that time?
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Christian Terfloth3:20
When I started, the European company had, now I have to convert, 50 million euros in sales, and when we changed the legal form to a public limited company in 2003, we consolidated worldwide 100 million euros, so quadrupled since then. In 2016, we created a future radar together.
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Interviewer3:48
Why and for what purpose did you do that, and what effect did it have?
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Christian Terfloth3:53
There are several reasons why we did this. One is to tap into globally available knowledge, which we did with the managing directors of our sales organization. We wanted to systematically capture what is happening in world regions as knowledge and trends, and with their structures and clear methodology, it helped us not to just go along with what is often known in the Mittelstand, where one shouts louder and thus it seems correct, but to truly evaluate and prioritize together. In the follow-up period, when working on the results, there was no longer the discussion of why we are dealing with this; instead, it was clear that we had worked it out together, prioritized it together, and the associated actions are now to be executed. This has led, in a very positive sense, to more discipline in how we tackle collaboration, and we have done a lot, such as setting up an academy for internal training and training of partner companies. We are doing much more regarding structured personnel development. You can see it as a building block or starting point to promote follow-up activities in the coming years.
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Interviewer5:38
How should entrepreneurs in Germany, Austria, and Switzerland improve their future management and strategy to be more future-proof?
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Christian Terfloth5:47
In my view, for strategy definition, scenario techniques are very helpful. One should deal with various scenarios of how one's own company can develop in different environmental conditions and which paths can lead to goals. Then, it is important to communicate the chosen path intensively, at least within the company, ideally also externally, and to do this repeatedly. It must be clear to employees what our strategy is; it's the worst when employees don't know the strategic direction. As a team, regardless of size, everyone must know where we stand, where we want to go, and what our goals are. Looking ahead, the situation will not improve, so it seems very important to me that companies not only focus on efficiency but also on effectiveness—is the path really correct? And what do I do to secure risks? We must be very aware of our risks and possibly sacrifice some efficiency to ensure our own delivery capability and market presence.
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Interviewer8:02
What are the specific trends for your business with industrial adhesives that pose major challenges?
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Christian Terfloth8:11
Then there is the big change within the framework of the sustainability goals of the United Nations, looking from a global perspective, and of course from activities like those of the European Commission regarding chemical policy. These major changes are coming, meaning moving away from fossil raw materials to bio-based raw materials and recycled raw materials. This is picking up speed and will enormously move, influence, and change the chemical industry and its downstream industries over the next years and decades. I think it will also lead to changes in business models. It is a huge challenge, but we are not in the driver's seat; we must find the right solutions through suitable collaborations, early engagement with suppliers, and active action. So the path is sensible, but today we must say that the required volumes are not yet fully available.
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Interviewer9:32
You won a prize for the Best Managed Company for the third time in a row, which cannot be a coincidence. What exactly did you win this prize for, and what is this prize worth?
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Christian Terfloth9:42
The BMC prize is an international prize awarded in over 20 countries worldwide. A jury composed of different competencies evaluates the right areas: strategy, sustainability, risk management, and company development. Winning it for the third time, the auditors were pleased to see a very positive company development over this period and that all requirements for such best-managed companies are met. What does Jowat do differently or better to meet these criteria? I come with a highlight. If we look at the development from 2019 to 2021, for the calendar year 2020, we created a sustainability report for the first time, structured on the basis of the Global Reporting Initiative and oriented towards the sustainability goals of the United Nations. We did this 100% voluntarily and self-motivated. As a non-listed family-owned company, we were not obliged to do so, but we actively did it and committed to specific goals we want to achieve in the coming years. We didn't go to 2030 but to 2025, as we want to achieve goals much faster. This self-motivation, commitment, team-building is for me definitely a highlight, and we received very positive feedback from our auditors who say we are pioneers in what we do. Also, feedback from organizations, customers, and suppliers is very positive. This is definitely a highlight for me, and we must see that especially the last three years have fully confirmed our triad strategy.
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Interviewer13:08
What do Dr. Terfloth and Jowat do completely differently from the mainstream, I believe?
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Christian Terfloth13:14
What helps us, and this is the challenge in a growing company, is that we in the board still understand the business—we know our product and what our customers do with it. Another point is that we are a true triumvirate; we are three equal board members who develop solutions through discourse and come to joint decisions. It is not that one is the CEO, one is CFO, etc., and ultimately one decides. We are a triumvirate, which is not found everywhere.
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Interviewer14:52
Are you all CEOs then, or what are your job titles?
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Christian Terfloth14:56
We all call ourselves board members or in English Managing Director, so there is no breakdown by functional areas, and that's how we present ourselves. We have our responsibilities for individual business areas, but we are all jointly responsible for the company.
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Interviewer15:02
To what extent would you say Jowat is a future-proof company?
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Christian Terfloth15:05
I would try to support this with facts, starting with the market side. We are industrial adhesive manufacturers; our products are not found in hardware stores but with industrial customers. Strategically, we have followed a diversification of our market coverage for many years, serving different markets with different economic cycles and crises. This shows that we have been able to handle all crises, such as the world economic crisis 2018/2016, the Corona pandemic, and the current crises resulting from the attack on Ukraine, and we have continued to grow. This demonstrates the pursuit of a long-term strategy, which is not unusual for a medium-sized family-owned company. Our triad strategy, started two decades ago, ensured that we could produce all significant technologies in all three world regions ourselves to serve each region. With our plants in Heilbronn, North Carolina in the USA, two plants in Germany, and our plant in Malaysia and China, we have expanded capacities and technological capabilities over the years. This has proven to be a significant contribution to resilience and defense against risks, reducing global supply chain risks and increasing delivery capability in local markets. The area where we have the least influence is the upstream side, meaning our raw materials. We are dependent on the products and delivery capabilities of our suppliers, typically large corporations. In the past two years, we experienced a significant increase in force majeure declarations from our suppliers, which has put our own raw material supply into a crisis mode in some cases. We had to make considerable efforts to obtain raw materials, and we had to implement partial deliveries to customers.
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Interviewer18:12
What is the image of society towards Jowat?
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Christian Terfloth18:14
The people in the region call Jowat a useful thing. Your employees and their companies as a company where one works long-term. There was a nice saying, which I always like to quote from employees: 'From Jowat, one retires,' meaning one doesn't go to another company but retires from Jowat. A bit of broken German, but it describes very nicely the image that employees and the regional society have of us. We are an employer dependent on long-term cooperation, and we offer it. We have very low staff fluctuation, low sick leave—all that can be statistically measured confirms this statement. We are seen as a company rooted in the region; we internationalize, but we also invest in Germany, in our locations, where we implement a significant share of our investment volume in expanding plant capacities and technologies.
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Interviewer19:40
You also invest in society, in the city of Detmold, right? I was recently the keynote speaker at the award ceremony of your research prize at the Haus der Technik.
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Christian Terfloth19:55
That is an impressive building, and our Haus der Technik is indeed a flagship for Detmold, a building that is also used by third parties for events. We rent out our spaces and thus give something back to the city as a very attractive venue.
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Interviewer20:14
Perhaps summarized in a few words, you have been awarding a research prize since 1995. Why does a medium-sized company like Jowat do that? How do you research the future of your products and solutions?
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Christian Terfloth20:26
There is a lot of passion behind it. Indeed, in the mid-90s, we were significantly smaller, and it was already important for us to become visible and attractive in academia. To do this, there are various activities. One is the research prize, which was a brilliant idea of my predecessor in responsibility, Dr. Frank, who said we can have a research prize for adhesives, which didn't exist at that time in Germany. We were the first with such an idea and gained approval in the research academia, especially from professors who dealt with adhesive technology, which was less developed then. Another aspect is that we built on this with many activities with universities, such as awarding research work and collaborating in publicly funded cooperation projects in Germany and the European Union. We are founding members of a graduate college in North Rhine-Westphalia, where about 20-30 graduates are accompanied each year by large chemical companies and us from the Mittelstand. The doctoral students visit us, get to know our company—these are many building blocks with which we have become much more visible in engineering and chemistry, which has paid off accordingly in the following time.
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Interviewer22:33
Which other companies do you personally see as exemplary and future-proof, known or unknown companies?
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Christian Terfloth22:40
I'll bring an example. I am advisory board chairman at the Schaumburg Group, a Detmold-based company in construction chemistry with worldwide collaborations. I have a view there and can share my experience. The market of construction industry and construction chemistry is exciting; there are definitely still many areas where one can develop positively and position for the future.
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Interviewer23:18
How do you manage to take time to think about the future and strategy beyond daily business?
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Christian Terfloth23:24
Indeed, I block times in my calendar so that I am not confronted with daily business because I believe our daily business is enough for several days, creating a certain bow wave. But now, to consider strategic questions in peace is simply a priority task for management. To take time. The second point is that as a board, we have always had fixed dates for our strategy meeting, where we take time outside the company, a period of three days plus or minus, to discuss, debate, and decide on strategic issues, and thus can give signals into the organization, especially for the next year or the coming years.
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Interviewer24:34
Many thanks, Dr. Terfloth. What can you learn from Jowat for your own company? I summarize it in the following points: First, Jowat is not without reason awarded three times as Best Managed. Dr. Terfloth leads his company together with two board colleagues as an equal triumvirate; no one is the CEO or others; all three are. This is an unusual solution that can provide much stability. Second, Jowat is focused on adhesives for professionals and extremely competent in this field. Second, Jowat breaks this focus down into numerous special applications with over 650 products. Third, Jowat acts worldwide with a triad strategy. This combination of focus and differentiation makes Jowat resilient compared to other hidden champions. Fourth, Jowat sets itself goals for sustainability and future viability without being obliged to do so, and even more ambitious than most others. This fits the image of solid long-term orientation and is a factor for countering uncertainty. Fourth, also that Dr. Terfloth has been a board member for 20 years is typical for many champions in family-owned companies. Many believe that permanent change and fresh minds are needed for the future; no, continuity, especially in leadership, is a strategic success factor. With such long tenures, one has skin in the game, meaning one sets one's own skin at stake when making strategic decisions today. Christian Terfloth and his colleagues know exactly that they will enjoy or bear the consequences of their current decisions and actions or omissions in the long term. Fifth, the experience and continuity ensure, as Dr. Terfloth says, that the people at the top still understand the business, understand their products and applications deeply, leading to decisions of the highest quality. Sixth, continuity has another advantage: from Jowat, one retires. This may sound old-fashioned, but it provides strong attraction for employees in Detmold and other locations. Additionally, Jowat, typical for Mittelstand, engages strongly in society at its main location. Seventh, Jowat has long been credibly networked with universities, schools, and institutes, conducting research collaborations. The adhesive research prize they have been awarding for 27 years is literally a magnet for new talents. Eighth, Jowat invests in a future radar, which we advised on, using future knowledge from outside and inside the organization to recognize opportunities and threats early, often underestimated in impact. Having a jointly supported unified future image as an orientation point for strategy and daily business; such a future image can be constantly compared, checked, and adjusted by every employee with market events. Future image does not mean creating it once and done; on the contrary, it creates the right attentions for signals in the here and now. It is not about predictions but ongoing diagnosis, a future radar. Ninth, Dr. Terfloth and his company urgently need to underpin their strategy with scenarios and solid future assumptions to expand thinking and determine a secure path to the future. If you want to equip your company with a future radar and make your strategy solid with scenarios, we have been doing such things for over 30 years, and we are happy to present you examples of our projects with the link in the description. You can find more information and contact options. This also works for very small companies. May you have a brilliant future.