Fast Company

YK2?

As we head toward Y2K on skis, snowboards, bikes, and skates, the people at K2 -- a top-of-the-line recreational equipment company -- treat their island headquarters as a totally integrated, indoor-outdoor laboratory.

You might expect to find the R&D lab and manufacturing facility of a world-class ski company lodged high in the Swiss Alps, headquartered in a clean, Bauhaus-style building.

You might expect to find the R&D lab and manufacturing facility of a world-class snowboard company set deep in the Colorado mountains, headquartered in a spacious, swooping, western-style structure.

You might expect to find the R&D lab of a world-class in-line-skate company tucked into a funky neighborhood in southern California, headquartered in a spray-paint-covered former warehouse.

And you might expect to find the R&D lab and manufacturing facility of a world-class bike company nestled in the French countryside, headquartered in a rustic château-cum-office.

But you would never expect to find the R&D lab and manufacturing facility of a world-class sporting-goods company -- one that makes skis, snowboards, in-line skates, and bikes -- on rural Vashon Island, in Puget Sound, Washington, or headquartered in a nondescript one-story building marked only by a small wooden road sign. Yet on that island, about six miles from the ferry landing, 700 employees of K2 Corp. manufacture $45 million worth of skis and $50 million worth of snowboards annually, and develop the latest in cutting-edge sports equipment for bikers and in-line skaters.

K2 Corp. is part of K2 Inc., the $575 million LA-based company that Bill Kirschner founded in 1961. Created as a ski-manufacturing outfit in 1970, K2 Corp. has expanded into other product sectors over the past decade, while continuing its record of innovation. For example, K2 was the first ski manufacturer to sell shaped skis; it was the first in-line-skate manufacturer to build a soft-boot skate; and it was the first snowboard maker to put a simple step-in binding on its boards. According to John Rangel, 45, senior vice president of finance, K2's expansion into these new lines of business hasn't compromised the culture around which the company was built. "We used to be a ski company," Rangel explains. "Now we're a high-tech sporting-goods company, with much greater brand recognition than before. But there's still a passion for our products and for the outdoors that you would be hard-pressed to find elsewhere."

And K2 does just about everything on Vashon Island: research and development; manufacture of skis and snowboards (bikes and skates are made overseas); product testing; brand development and marketing. For K2's people, this counterintuitive location provides a special set of advantages -- by creating a work-and-play environment.

No Company Is an Island

At first glance, the island location seems a little inconvenient. About half of K2 Corp.'s employees live on the mainland, and their commute involves a drive from home plus a 20-minute ferry ride. Shipping supplies and equipment to and from the facility is more complicated than it would be if the company were located in nearby Seattle.

But ask K2's employees about the island setting, and they'll tell you that they wouldn't change a thing. According to Ryan Hayter, 30, publicity manager for K2 skates, the culture puts a premium on enjoying outdoor sports -- not on spending time in fancy offices. "Big decisions here are made on the mountain, in the streets, and along the backwoods trails," he says. "Our office is the outdoors."

Tour K2's headquarters, and you'll have to weave your way around mud-splattered bikes leaning against walls; you'll find helmets and skates tossed on desks; you'll overhear half-serious debates about who has spent the most time on the slopes (there are hundreds of ski trails within an hour's drive). At lunchtime, K2 employees often head out, alone or in small groups, to the island's 15 miles of mountain-bike trails, to the company's skate track, or to the facility's "half pipe" skate park, all of which are right out the back door. Sometimes employees even take off an afternoon to go "product testing" at a local ski area. "Those of us who work here aren't just employees," says Hayter. "We're athletes. We're product testers."

According to Rich Greene, 50, creative director of new-product development, the island location complements a culture that encourages high levels of creativity. "When you want to do something, you go ahead and try it," says Greene, a 21-year veteran of the company and a lifelong extreme skier. "We're all risk takers, and there's no approval process. The culture here allows for practically unlimited creativity. That's a big part of what K2 is all about."

The Race Is to the Quick

In K2's world, speed is the ultimate competitive weapon -- whether you're bombing down a mountain on skis or pedaling furiously on a bike. The same principle applies to the design and manufacture of K2 skis, a K2 bike, or any other K2 product: If you want to win, you've got to get your innovations to market first. What tricks of the trade has K2 mastered so that it can compete on speed?

First, K2 emphasizes vertical integration. Because it does almost everything in-house, from designing its distinctive graphics to making its own machine tools, K2 can move quickly to execute its innovations. "There's very little hierarchy here," explains Jim Bennett, 38, vice president and general manager of global manufacturing. "Everything is integrated, and everything is constantly changing. Some of that change is intangible, but some of it is very physical. There have been a number of times when I've walked into a room and said, 'Wait a minute. I know there was a wall here yesterday!' "

Minimal automation is the second component of K2's ability to innovate faster than its competitors. With more than 350 factory workers on hand, K2 is able to make a one-off pair of skis for one of the pro athletes whom it sponsors, or to run a large order of rental skis through its system -- and it can switch easily from one task to the other. "The more you automate, the less flexible you become," explains Bennett. One result: When shaped skis were developed in 1993, K2 adjusted its manufacturing processes within one season and brought shaped skis to market a full year before any U.S. competitor.

Of course, moving fast means that you sometimes wipe out. When K2 hit the market with the first-ever soft-boot in-line skate, customers were thrilled -- until the plastic cuffs on the back of one model started cracking. According to Bennett, that was a problem but not a catastrophe. "Sure, we made some mistakes," he says. "And given more lead time, we would have changed some things in the soft-boot skate. But because we got there first, we became the market leader in that category." K2 quickly solved the cuff-cracking problem, and today K2 skates are the second-best-selling brand in the United States -- even though its $150 starting price is notably higher than what Rollerblade, the overall market leader, charges.

Outdoor Industry, Outside Talent

As an avid competitor, K2 is always eager to learn. Two years ago, for example, Jim Bennett and several other K2 employees benchmarked the compact-disc industry, and came away intrigued by the use of ultraviolet inks to print designs on CDs. Today, K2 is the only manufacturer that uses UV inks instead of solvent-based printing in the manufacture of skis and snowboards. K2 borrowed Piezo technology from the military and aerospace industries, where it is used to reduce vibration in airplane wings, and developed antivibration computer chips for its skis and snowboards. K2's practice of braiding layers of fiberglass and carbon inside its skis -- to control for stiffness -- came from the cable-TV industry.

K2 doesn't just seek ideas from other industries -- it seeks talent from outside the sporting-goods industry as well. On the Vashon Island manufacturing floor, you'll find employees who worked previously in the aerospace, chemical, textile, and automotive industries. "With employees who have come here from a wide variety of industries, we can draw on outside knowledge and figure out how it applies to us," says Bennett. "Good ideas for change in the ski industry aren't found just in the ski industry. Good ideas are everywhere."

Lisa Chadderdon (lchadderdon@fastcompany.com) is an avid skier and a staff writer at Fast Company. To learn more about K2 Corp., visit the Web (www.k2sports.com).

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