Innovation

The man with the Midas touch

Written by Jennifer Myers

As a kid growing up in Edmonton, David Cynamon lived football. His bedroom was wallpapered with pictures of his Canadian Football League heroes and he spent hours practising his moves in backyard contests. Game nights would find him working at Clarke Stadium, selling hot dogs for his father, who owned the concession stands. “My life was all about sports,” says Cynamon, whose dream was to play quarterback for his beloved Edmonton Eskimos.

Playing professional football may be the only goal that has eluded Cynamon. No matter, today he’s winning at the game of business, and the 40-year-old Toronto entrepreneur has already executed three perfect plays — all on third down and long. In the early 1990s, Cynamon transformed NHC Communications Inc., a struggling online information service, into a computer-connectivity manufacturer that ranked among Canada’s Fastest-Growing Companies. Then he focussed his energies on Concord, Ont.-based KIK Corp., turning the near-bankrupt bleach manufacturer into a diversified producer of private-label cleaning products boasting 2004 revenue of US$214 million and a successful IPO on the Toronto Stock Exchange.

What has vaulted Cynamon into the spotlight is his gig as co-owner and saviour of the CFL’s Toronto Argonauts. Since buying the Argos out of bankruptcy in November 2003, Cynamon and partner Howard Sokolowski have done the near-impossible: make Canadian professional football work in Toronto. In just one year, the dynamic duo doubled season-ticket sales to 7,000, tripled corporate sponsorships and increased average attendance from 14,000 to 22,000 fans a game. The icing on the cake: winning a little thing called the Grey Cup.

The game still isn’t over. Like a true perfectionist, Cynamon is moving the goal line farther away. First, he wants to grow KIK’s revenue to US$1 billion within five years, even as opportunities for industry consolidation diminish. His ambition for the Argos is simply to build “a solid, first-class franchise” — a tall order in a city that hadn’t cared much about the CFL in the decade before Cynamon took over. Given his track record, no one should bet against him. Whether it’s microchips, laundry detergent or pigskin, everything Cynamon touches turns to gold.

But there’s no magic here. Rather, Cynamon’s instincts and canny street smarts allow him to see opportunity, develop a plan and then assemble all the pieces and people needed to execute it. His Midas touch tactics? Be the absolute expert in your industry, create a culture in which employees continuously raise the standards of excellence and sweat the details.

If you ask those who know Cynamon well to identify reasons for his success, you’ll get just one answer: Cynamon himself. Spend a little time with the charismatic entrepreneur and you’ll have no trouble believing he can accomplish anything he puts his mind to. Handsome and athletic, he radiates energy and confidence. “I look at life as one large, long board game,” says Cynamon. “I was put on this earth to play the game aggressively and take some chances, to do some things that perhaps others won’t do. If I fail — which I don’t expect to do — that doesn’t scare me. I’m ready to go on.”

Cynamon has always possessed a competitive streak. As a sports-crazed kid, he was never the biggest, fastest nor most skilled player. But what he lacked in talent, he made up for in enthusiasm and sheer determination. “Something must have happened in my childhood that forces me to be the victor,” says Cynamon. “I have to have that win.”

Howard Brodie, a long-time friend and KIK’s chief operating officer, agrees. “David’s passionate, competitive, self-confident, and the word ‘no’ doesn’t exist in his vocabulary,” says Brodie. “I’ve never known anyone who is so comfortable in his own skin. He energizes people. They get swept up in his enthusiasm, and they want to work harder.”

Just ask Sokolowski, who had never met Cynamon before they sat down for lunch to discuss the possibility of buying the Argos together. Five hours later, they had a deal. “David has charisma, he’s attractive and accessible, and people want to be around him,” says Sokolowski, who is also president of Tribute Communities, a Toronto-based home developer. “He’s warm, caring and looks after a lot of people.”

Personality aside, Cynamon has also benefited from the teachings of two good mentors. First was his father Henry, whom Cynamon shadowed from the age of 10, helping him collect money from his vending machines, sitting in on meetings and always listening and learning. “My father was a hands-on entrepreneur, a hard worker,” Cynamon says. “That’s where I learned the details of business.”

Cynamon’s second major influence was his father-in-law, the late Gerry Pencer, founder of private-label soft-drink giant Cott Corp. “Nobody ever held a room or was loved so much by employees or family or friends as Gerry,” says Cynamon. “He made you feel like you were the most important person on earth. He liked people, he liked to be involved and he was sincere about it. He taught me to put a priority on people.” Equally important was Pencer’s lesson on the value of thinking big. “When I came out of Edmonton at 17, I was a small-time, small-thinking guy,” Cynamon explains. “Gerry was a visionary, and that’s where I learned all of my big-picture thinking.”

When it came to developing a vision for KIK and the Argos, Cynamon didn’t have the benefit of a blank canvas. Both were aging enterprises scarred from years of mismanagement. The Argos brand was on life support. “KIK had no brand,” recalls Cynamon. “It was one product, and one plant.”

In 1995, Pencer recruited Cynamon to KIK on a 90-day contract. Cynamon had just sold his stake in NHC Communications, which he’d acquired in 1987 and grown from annual sales of $300,000 to $11 million by 1994. Pencer had recently purchased KIK and wanted Cynamon simply to assess the viability of the company, as its primary lender was looking to shut it down.

“KIK was just a day-to-day ‘What did we sell today? How much product can we push through today?'” says Cynamon. He thought it could be much more. Private labelling was growing rapidly in Canada — witness Cott’s success with President’s Choice soft drinks. Why not do the same with bleach? “Loblaws was one of the most profitable grocers per square foot in the world,” Cynamon explains. With that kind of success, it was inevitable that other retailers would adopt the private-label strategy. Indeed, Cynamon was so excited by the future of private labelling that he bought a majority stake in KIK and assumed the CEO’s role.

Private labelling meant making products equal to or better than the national brands. However, the industry was a sea of mom-and-pop operators who kept the business cheap, nasty and low-end. “Regardless of what I believed in,” says Cynamon, “if I have 35 competitors and they’re not all on the same page, this market, this industry will never develop.” The solution: consolidation.

“I envisioned the opportunity as a two-lane highway,” says Cynamon. “One lane had pure old-fashioned consolidation, the other lane — and eventually these two would meet — was the success of private label.”

Cynamon adopted a similar long-range view of the Argonauts franchise, which will celebrate its 132nd birthday this year. Since the late 1980s, the franchise had been in the hands of numerous owners. Most recent was Sherwood Shwartz, who couldn’t or wouldn’t see that sports entertainment was changing — and that the Argos hadn’t kept pace.

Sokolowski says Cynamon is the one who righted the good ship Argonaut. “David’s done things with the Argos that no one else could,” he says. “He looked at the whole picture, from A to Z, and then figured out what needed to be done.”

“We didn’t have to reinvent the brand,” says Cynamon, “but we did need to bring it up to today’s time and pull the old Argos fans out of the closet.” Nothing was overlooked, from the front office to the playing environment to the fan experience.

The devil really is in the details, believes Cynamon, and how you handle the minutiae can make or break a business. “Every detail — and there may be a thousand in any equation — adds up,” he says. “It’s how we answer the phone, how we call back a season-ticket holder, how his tickets look. They’re details that most people overlook, but that you can’t overlook if you’re coming from the bottom up.”

The first detail of business for Cynamon and Sokolowski was installing former TSN television network president Keith Pelley as the Argos president and CEO. Then the trio set about rebuilding a brand that was in far worse shape than they’d realized. “The Argos office was a mess,” says Cynamon. “We didn’t even have a database of our season-ticket holders. There were no systems. You couldn’t find anything.”

To shake off the neglect, Cynamon and Sokolowski began thinking from a fan’s perspective — examining the whole game experience — from purchasing tickets to arriving at the stadium to the game and even the uniforms. New turf was laid on the Argos’ home field in the Rogers Centre (formerly SkyDome) as much for players’ safety as asthetics, the team’s medical staff was increased and fans were greeted in the parking lot by clowns and musicians.

“Our expectations are high,” says Cynamon. “If we can meet our expectations, then I’m sure we can meet others’.” The new owners even swept through the Argos’ 20-person front office, replacing several staff who weren’t up to snuff. People might see that as ruthless, says Cynamon, but it’s important to move quickly instead of waiting to discover whether someone fits.

Seemingly insignificant details were also the source of KIK’s malaise. “When I came into KIK, I saw so much detail that was being overlooked,” says Cynamon. Nowhere was the evidence more glaring than in the firm’s culture. “It was everything from the way people dressed, which was ultra-casual even before casual was acceptable, to our facility, which was dirty and messy,” says Cynamon. “Morale was horrible.”

It was a sad flagship for a business enterprise that was playing the consolidation card, buying up small manufacturers to build a strong cross-continental network. Like the Argos, KIK experienced high turnover after Cynamon arrived; many people left voluntarily, while others were shown the door. “We shoot for a culture that doesn’t know how to say ‘no’,” says Cynamon. “If we say ‘no’ at KIK or the Argos, it’s because no one on earth can do it.” Cynamon wasn’t going to tolerate anything different at his acquired companies. “Some people had been trained too long in a poor culture and just didn’t buy in,” he says. “We made eight acquisitions in the first six years, and we probably had 98% turnover.”

There’s no question Cynamon can be demanding. “He’s a perfectionist,” says Brodie. “But he wouldn’t ask something of staff that he’s not prepared to do himself.”

“It’s a partnership,” says Cynamon, expressing a philosophy he lives and breathes with actions, not just words. He makes small gestures to connect with his 700 staff, such as sending them birthday cards or offering up coveted tickets to Toronto Maple Leafs or Raptors games. When Air Canada reduced the size of its allowable carry-on bags, Cynamon purchased new ones for all of his managers. Particularly hard-working staffers are treated to dinner or even trips. Every day the firm buys lunch for about 150 administrative employees in its 11 manufacturing facilities. And staff are given one afternoon off each month to devote to family. Such a generous approach would make the eyes of most CFOs roll, but Cynamon insists it inspires people to excel. “If they really like you, they’ll take a bullet for you,” he says. “If they just respect you, they’ll duck.”

Because of the geographical spread of KIK’s plants, Cynamon has tried to instill the same mantra in his managers. And as KIK and his other interests expand and multiply, it’s becoming more challenging for Cynamon to execute the hands-on approach that has made his ventures so successful. Cynamon is also a co-owner of the Liberty Grand, a posh Toronto banquet facility, and the principal of Ontario MRI Centres, a private magnetic-resonance imaging clinic with locations in Toronto and Mississauga. He’s also a director of The Gerry & Nancy Pencer Brain Trust, a family foundation set up by his father-in-law to support patients with brain tumours.

But for now, he’s 100% committed to KIK, and any time spent on his other endeavours is carved out of his dwindling leisure time. He survives by relying on his core management team, which includes Brodie, and the support of his wife, Stacey. One sacrifice he won’t make is spending mornings with his three children before driving them to school.

Cynamon’s pace may become even more frantic as KIK grows. In August 2002, the firm went public as KCP Income Fund (TSX:KCP.UN), raising $225 million to help fund expansion. Revenue in 2004 climbed to US$214 million, up from US$205 million a year earlier; profits jumped to $12 million from $8 million over the same period.

“This will be a billion-dollar business in five years,” says Cynamon. One expected source of growth is in private-label market share, especially in cleaning products other than bleach (KIK currently holds 75% of the private-label bleach market). Cynamon also intends to capitalize on the excess capacity of KIK’s manufacturing facilities by wooing more national brands into contract packaging deals. In December, the firm landed a contract to produce Javex bleach and Fleecy fabric softener for Colgate-Palmolive Canada, adding to its already impressive stable of brand names such as Windex, Shout and Fantastik.

Ironically, KIK’s success could ultimately mean it outgrows Cynamon. “It becomes a different game,” he admits. “At 700 people, it becomes difficult; 3,000 people might be outside my ability.” The thought doesn’t worry him. “I’m better with a small group, and I’m planning for that. It’s important for the company. It’s not about the job, it’s about the longevity and success of KIK forever. The status of the job means nothing to me.”

If and when that happens, Cynamon will still have the Argos. “There is no exit strategy,” he says. “We want to own it until it’s solid and successful.” After scoring a touchdown on his opening drive, the bets should be on Cynamon to win the game.

Originally appeared on PROFITguide.com
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