Robert Shillman (“Dr. Bob”) left academia in in 1981 to start Cognex with his entire life savings of $87,000. Since then, he has helped grow Cognex into one of the world’s largest providers of high quality machine vision systems used in manufacturing and logistics automation. Cognex is now worth over $8 billion and does $1 billion in annual revenues.
Andvari has long admired Dr. Bob as he is the epitome of a founder who has achieved success while having undeniable fun along the way. Dr. Bob instilled an extraordinarily unique culture that has helped drive the success of Cognex. When Dr. Bob retired from Cognex and recorded a three-part interview of life lessons. Andvari shares two of our favorite lessons.
CUSTOMERS FIRST
As a kid, Dr. Bob would help in his dad’s yarn shop on Saturdays. His father had a policy of encouraging people to buy more than they needed for a project and allowing them to return what they didn’t use. Dr. Bob remembers a woman that wanted to return two skeins of yarn that he knew was from Woolworth’s. He told his father they shouldn’t give her money back for something she didn’t purchase from them. Dr. Bob’s father said, “Give her the money back. She’s a customer and I don’t want to lose a customer.”
Another customer-centric experience occurred after Cognex expanded into Japan. Dr. Bob shares that he met with the President of Shinkawa, a maker of assembly equipment for semiconductors. The President told Dr. Bob there was a problem with the Cognex product. Dr. Bob asked if it worked. The President clapped his hands and in rolled a cart with several damaged protective boxes in which the Cognex products were shipped. The President confirmed the actual Cognex products worked, but he also said the fact the packaging was damaged was unacceptable.
Dr. Bob, who was 30 years old at the time, nearly began to lecture a 65-year-old executive on how the only purpose of the damaged boxes was to protect the product. However, Dr. Bob remembered what had happened when he had bought a set of souvenir chopsticks prior to the meeting. After Dr. Bob had chosen the chopsticks, the salesperson cleaned and polished the chopsticks, brought out and carefully examined a box for them, put the chopsticks in the box and carefully wrapped it.
“I realized that in Japan, the box is a statement about the quality of the product and the company. The box has to be perfect,” explained Dr. Bob. He then got on the phone with the Cognex head of manufacturing to explain why the packaging had to change: “This is what’s required in Japan.”
A culture and attitude that puts the customer first, that always tries to understand and meet their needs, is a big part of what has made Cognex successful.
COGNEX CULTURE
Culture is another factor that has helped Cognex succeed. On the culture at Cognex, Dr. Bob explains, “It’s work hard, play hard, and move fast—in that order.” Employees are called Cognoids. The company’s favorite holiday is Halloween. Dr. Bob has driven to Cognex offices in an ice cream truck during the summer to hand out ice cream to Cognoids. The official Cognex salute is adopted from The Three Stooges. Dr. Bob appointed himself Chief Culture Officer in 2011 to focus on maintaining the culture across offices in 20 different countries. A fun and rewarding workplace has led to low turnover and a place that leads to more connections, collaboration, and growth.
Cognex has also turned the boring requirement of publishing an annual report into an opportunity to showcase its unique culture. For the past few decades, Cognex has parodied a variety of magazines, publications, and pop culture icons. Cognex annual reports have parodied Sky Mall, Mad, Bon Appétit, The National Enquirer, Back to the Future, and X-Men. Andvari has written before about several “conference call mavericks” (see Part 1 and Part 2). For its 40th anniversary in 2021, Cognex even put together a high quality video in the style of a dramatic movie trailer!
For their fun and zany communications, Cognex is worthy of inclusion in this group of outstanding companies with non-standard investor relations efforts.
ANDVARI TAKEAWAY
In the Bon Appétit-themed 2019 annual report, Dr. Bob aptly describes “Chez Cognex”:
“While dining trends are fickle, what makes a restaurant great remains constant. Quality ingredients and knowledgeable, hard-working employees who are dedicated to the Cognex value of Customer First. By maintaining our focus on these important fundamentals, Chez Cognex will always be a five-star operation that is a cut above the rest.”
Founder-led companies with a unique culture and that operate differently than your typical enterprise are always worth following. Differentiated cultures and business practices are usually a good signal of differentiated business results and shareholder performance.
Sources and Additional Reading/Viewing
- Cognex annual reports archive
- Life Lessons with Dr. Bob, Part 1 of Dr. Bob Interview
- Life Lessons with Dr. Bob, Part 2 of Dr. Bob Interview
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IMPORTANT DISCLOSURE AND DISCLAIMERS
Investment strategies managed by Andvari Associates LLC ("Andvari") may have a position in the securities or assets discussed in this article. At the time of publication of this blog, Andvari clients had no position in Cognex. Andvari may re-evaluate its holdings in any mentioned securities and may buy, sell or cover certain positions without notice.
This document and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This document contains information and views as of the date indicated and such information and views are subject to change without notice. Andvari has no duty or obligation to update the information contained herein. Past investment performance is not an indication of future results. Full Disclaimer.
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