The Interview: John K Solheim on…

25/10/2022

In April 2022, John K Solheim officially became just the third CEO in Ping’s 63-year history, taking over the reins of the family-owned business from his father, John, who in turn succeeded his father, Karsten. As with most things at Ping, it was a decision taken with care and the culmination of a process several years in the making.

John explains to Golf Business Quarterly the rationale and outlines his hopes and plans for the business.

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…Ping’s succession planning

It was 2017 that I became president. Now I'm the CEO of Ping. That happened in April. (The handover has) been really good. I've learned a lot more patience, and when it finally did happen, I wasn't pushing forward, I felt like I had plenty of responsibility already. I would say it's gone very smoothly. The nice thing in our family business is everyone gets along. There's no strife among the family, on direction for the business or members wanting to sell. We pretty much have a united front on everything, which makes it pretty easy to manage and deal with the different personalities.

…John Solheim's ongoing involvement in the business

I would never say it's minimal. He's less involved than he was and less passionate about making all the decisions. He's still got a big passion for product development. He wants to know what's going on and still likes to contribute as much as he can on features to add, especially as we have new designers; he likes to make sure they understand our Ping heritage and what's important to make a good golf club. My dad definitely thinks a lot. I wouldn't say he talks a lot.

…The challenges of being a third-generation business owner

Statistically, I’m the bad generation. The first generation, you have a founder who starts a business, and then the second generation usually has been involved with their father or mother in the company and knows the ins and outs of the business. You get to my generation, it's really more on that person to be involved with the business and understand it because they've had other opportunities and the ownership has spread out.

One, it's just hard to keep businesses successful for a long time. So, by the time we get to third generation, you're talking 50-plus years, it’s easy for economic downturn, technologies to change or whatever. Two, people want to cash out or just have less interest – you know, it was my grandfather's passion, it's not my passion – and want to sell the business. That's the typical third generation.

Fortunately, I decided early on this is something I want to do. I’m very passionate about golf and love to play golf. The idea that I wake up every morning to go and design golf clubs and test golf clubs at work, and I get to come on semi-work trips to the British Open – I feel like I've got a really good gig and I’m not looking to make it go away.

Going beyond to the fourth, to my kids, and there are 44 great grandkids of Karsten and Louise, there's not a tonne of interest in golf. But there's enough, which I think is ideal because, at some point, you almost need to funnel it down to the next generation of leaders. I'm excited to see, as those kids get older, who takes an interest in the business and wants to lead the next generation.

…How his own skill set compares to his father’s and grandfather’s

I don't know if I'm a team player, but I guess I'm probably a better delegator. Karsten was definitely just a one-horse show. He did it all. I was always shocked when I interned for him. He was going to engineers with degrees, and they were coming to him with questions. And I was like, 'well, this doesn't make sense to me – I'm going to school so I know all this stuff, not so that I have to go to my boss and ask him what to change and how to make this golf club work'. That was Karsten really wanting to control all the process. And then that's the way all the employees worked.

My dad saw a lot of that and did a good job of refocusing the business. He has a super-high attention to detail. When I talk to an engineer, I'm like, 'I want to do this, this and this, but how you get there, I don't care'. He's more, 'how did you get there?'

I'm more of a systems/process person. We didn't have a process for how to develop a golf club, how to test a golf club. Every person did it differently. I standardised the best way and now when we have these engineers that are super successful, let's write down how these guys do it and get everybody to do that process. And the same with our testing – how do we standardise it and then make improvements on what we're doing?

I'm more of a systems guy. For example, Paul Wood (Ping’s VP Engineering) was an awesome engineer. How do we make everybody like Paul Wood? I said to Paul, 'you're going to run this and you're going to put in processes that you use and train everybody how to do it, so that everybody can have the same successes that you're having'.

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…Lisa Lovatt’s succession of John Clark at Ping Europe

Lisa got the trial by fire. There was about a year and a half where Lisa took over the main role and John just oversaw things. And then the day he officially retired, the whole country shut down the next day. So Lisa came into business with the whole retail network closed down. By then, they had figured out how to do sales by drive up and stuff like that. Just chaos for her to take over then.

So far, it has been great. We're doing Teams calls with her every other Tuesday morning, I come in first thing and check in with Lisa. Lisa has been with the company for a long time, so she really knows the ins and outs. She came from the operations and customer service standpoint. So really knows the core of the business, especially Europe, where, until recently, we really haven't had the engineering side, it's more been, 'how do we get the orders out and how we market the product?'

She's kind of the operation side, which John was as well. We've got a great marketing team over here, and she works well with them. I'm excited for Lisa's legacy to start up and just continue to have great success in Europe.

…The man Lisa succeeded

I've always sought John’s advice. He was a very wise guy who did a great job running Europe for over 20 years. John was someone we brought in from the outside, and I think, for all but like two years, we had year-on-year growth, which in the golf industry is unheard of. To always be able to count on a solid number from Europe was awesome. He did a great job of planning his retirement, as he phased out.

The great thing with John is he's still on the Ping Europe board so he's still involved in a limited way. I think he did a great job of retiring and actually retiring – we have a lot of people who retire who don't really retire. He actually retired, but we can still tap into his wisdom. It's great to have him still involved in that sense.

…How form and function meet in a Ping golf club

From my time in Japan and Asia, one of the big differences is, if you go into a retail store, they pick it up by the head and they get really close to it. They are way into the details.

I'm not an expert in Europe, but I think they're more like the US, where they grab a club by the grip, look down and give it a waggle. 'How's it look from there?'

But, at the end of the day, they hit it and they choose a product that works as well. They are into cosmetic standards and the finish. They've helped us because we've implemented that whatever is good enough for Japan is good enough for the rest of the world. It's not like we have a higher quality standard for Japan – it's the same. But we definitely did have to raise our quality standard to have success in Japan. They're not as serious golfers as especially in the UK and US, but they still have launch monitors, and if you can't hit the club, you don't buy it, or if you buy it, you're going to buy something different in probably a different brand the next time. That's been our key over there – we fit and show them on a launch monitor and on the driving range how our product works better for them. And you end up having more fun when you're hitting more fairways and greens and making some putts for pars and birdies.

…Looks being more important than in Karsten’s day

That is something I could say I brought. We didn't have any industrial designers in engineering. I remember hiring our first one. And now we got a whole department of five people at least. It's more than just cosmetics. It's functional cosmetics. They work with the engineers on how we show the technology in the golf club. Golf is all about confidence, so when the purchaser sees these tungsten weights, then they feel the forgiveness. They can see it and it turns into confidence over the golf shot.

…supply-chain issues

We haven't had any big issues in almost a year. We had the big Vietnam closure last year when they were closed for three months. The ripple effect is we've been playing catch-up ever since, but we're getting caught up with that. When your supply’s down and your demand’s right up, any uptick in demand and, all of a sudden, you're short again.

I would say everything's starting to soften out a little bit – just generally economy wise. I think the suppliers have built up their capacities.

I wouldn't say we're totally out of the woods because every government's policy is different on how they handle the pandemic. Freight is also causing a lot of issues. It's been a stressful couple of years. It's been a nice stress, knowing that there's a lot of business to be done. You always dreamed about your business growing like this but never realised how much work it would be, it's more work when the orders are stronger. That was a miscalculation on my part, I was like, 'if we sell more, everything's good'. No, if you sell more, everybody has to work that much harder.

…Product cycles

I think we've had to go a little longer and postpone stuff just because development takes longer. And when you're running full bore on one product, you can't really switch over to the other product without chopping off one to save the other. And we’ve got great products. So we haven't been in a hurry to introduce new stuff. With the new product we have coming out, I actually think the extra six months we've had has led to a bigger jump in the performance. So I'm super-excited about that. I would say it's a little early to tell where the life cycles will end after this boom. We've stretched out to two years, and we're going to see how that works. It's created some opportunity to look at our whole product plan and product life cycles and how we can optimise it.

I think a little longer is something the consumer likes a little better. No one likes to buy a set of golf clubs and get it obsoleted that quickly. On the other side, when all our competitors have new product and we don't, we end up losing market share. So it’s a balance. I think we're in a good spot. We’ve got a great pipeline of product coming. So I'm very encouraged that we will gain market share and continue to bring out new product in a timely manner but maybe not quite as rapidly as we used to. It lets you develop something that’s incrementally better. I think that that's more what the consumers looking for too.

…on whether customers are at the limit of what they're prepared to pay for equipment

That's a good question. I can say inflation is real. The costs have gone up on everything – grips, shafts and on top of that freight. That’s not just freight going to the consumer, there's also freight bringing everything to our factory to build it. As well as our employees – we've given out very hefty raises to help our employees keep up with inflation.

It's a tough thing to do. Because once you start going, and we're talking general economics now, the prices go up here, and everything goes up here, and now we’ve got to give everybody pay rises. It's tough to control.

Our goal is not to be above inflation. Obviously, we've got to keep up. But there's no intent on our part to over-inflate the cost of our golf clubs.

…the aftermath of the pandemic boom

I'm actually excited that golf had its pandemic boom and that things are settling down to get back to the basics of developing good product, delivering it and battling for market share. I feel like we are really good at competing on product performance and not just what the supply chain can provide. I would say that what the pandemic did is shut some industries totally down and turbocharged other ones. We were fortunately one that got turbocharged, but I think there's going to be a slowdown as aeroplanes and hotels and all that travel goes up.

I'd like to think we created more golfers, so we've got a higher base. We're going to be 20% higher than when we were in 2019.

A lot of people did have hard times, but a lot of people kept their jobs, worked from home, and went on savings plans, and then the Government sent them money. And they're like, 'well, I'm working from home, so I'm golfing twice a week, and I want to buy new golf clubs'. That kind of free business, I would say, is going away. I like going back to the old world where we have to work hard to get market share, develop better product, and give fair value. And that's how we gain market share long term.

…Possible changes to the way the golf industry operates in terms of importing products from the Far East

Supply-chain, management-wise, a lot has changed. I would say there's been a diversification of risk rather than single sourcing, particularly in different countries. We do as much as we can in the US, but a lot of the stuff we buy, you just can't get in the US. The same goes for the UK. We try to buy locally where we can.

I would say it's definitely changed. What they called lean manufacturing – or just-in-time inventory – everybody's taking another look at that. Maybe we need a little more than just in time in case the shipments don't come in. In the perfect world, you get vertically integrated but then you're really at risk of obsoleting yourself technology-wise, because if somebody else comes out with something, and you're committed to this technology, it makes it really hard to leave what you're invested in and go to a different technology. So there are pluses and minuses, and we're still learning and evolving. Overall, we did a really good job of keeping a steady flow of product going out through the whole time. We could have shipped more, but I would say we did a pretty good job raising shipments by 20, 30 even 40% and never totally running out. So, yes, people wanted them more quickly, but the nice thing was our consumers were a little more understanding that this is not just incompetence by the company. This is a worldwide issue that people just can't get everything they need.

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