Selim Bassoul, Middleby’s CEO for 18 years, believes understanding a changing world is key to the future of business.
As one of the longest serving CEOs among Fortune 500 companies, Selim Bassoul believes understanding a changing world is key to the future of business.
Given the median tenure of a Fortune 500 CEO is just four years, Selim Bassoul is a rarity. Now 18 years into his role as CEO of The Middleby Corporation, he has outlasted most of his peers by more than six times. Bassoul was named Top CEO in 2017 by several publications, and The Greatest CEO of All-Time by financial services company The Motley Fool. His performance is indeed hard to dispute as the share price of The Middleby Corporation has risen by more than 12,000 percent since he assumed leadership of the company in 2001.
Bassoul believes he has survived and prospered by constantly looking at the bigger picture within the business world. For example, when the restaurant industry was heavily hit by the Great Recession, both Middleby, a global leader in the food service equipment industry, and many of its competitors, were negatively impacted. Yet Bassoul believes that his willingness to act swiftly and boldly to transform the company was key not only to the company’s survival, but also its ongoing rise.
“The restaurant industry was among the hardest hit in the United States during the financial crisis,” Bassoul recalls. “Twenty-five percent of all restaurants in the U.S. closed between 2008 and 2009, which meant that 25 percent of our business disappeared overnight. Being the biggest in the market, you get hit the hardest.”
Yet Middleby took a very different tack than many of their competitors, and Bassoul believes the combination of a swift response accompanied by bold ideas was crucial to the company’s rapid recovery.
“At the time, everybody was cutting costs,” he explained. “But at Middleby, we doubled down, investing hundreds of millions of dollars in hiring salespeople, introducing new technologies, and even making one of our largest acquisitions ever, TurboChef Technologies Inc., in 2009.
“We hired many of the great people our competitors were letting go. It was the boldest move I’ve ever made, and I’m proud to say it paid off,” Bassoul said. “When I look at my legacy, I think that has been my greatest achievement.”
Another moment that Bassoul remembers fondly was buying the commercial division of Maytag right after September 11, 2001, during his first year as CEO. “This was our first acquisition ever; however, banks were not willing to lend us money as all businesses were negatively affected during that period,” he recalled. “Everyone was sceptical of the timing and assumed that the acquisition would fail. Despite everything, we still purchased the company because it had complementary product lines and technologies that we needed.
“We were able to turn around this acquisition in a two-year period and paid back all the loans in record time,” Bassoul said. “Since then, Middleby has acquired more than 75 companies.”
Turning a company around
Founded in 1985 and headquartered in Elgin, Illinois, The Middleby Corporation develops and manufactures a broad line of equipment used for cooking and food preparation in commercial restaurants, institutional kitchens, food processing and industrial bakery operations, and residential settings around the world. Middleby makes everything from ovens and refrigerators to cutting-edge waste management technology.
Yet when Bassoul began his leadership at Middleby, the company was strapped for cash and unable to undertake needed product line investments. He believes that the company did not take the necessary steps to make profits a priority. Furthermore, employees were not given a clear long-term vision, leading to an employee turnover of 30 percent annually.
“I think that Middleby at that time was very slow to respond to change in areas like research and development, and product innovation,” Bassoul explained. “The company was losing money, we were not able to ship orders on time and our customers were unhappy. The first thing I did was to focus on what we did best. I said, ‘Let’s create a culture of winning, and make sure our employees are motivated and incentivized to stay.’” The results speak for themselves. Last year, Middleby made a profit of $550 million compared to just $8 million in 2001, the year Bassoul became CEO.
The bigger picture
While Bassoul has taken many calculated risks during his journey with Middleby, he is most well-known for how he and his team immerse themselves in the business of their customers. Bassoul estimates that he spends over one third of his time visiting customers to observe how Middleby equipment is being utilized and learn how to develop the solutions to make the day-today operations of those customers more efficient.
“I remember when a pizza chain wanted to expand into chicken wings, and they had never fried food before,” he recalled. “We developed automated frying systems that require very little involvement by an operator. Another example was the development of a unique ventless oven for a coffee chain to help them serve fresh food fast. They had never cooked food in their stores before.”
According to Bassoul, these solutions are the direct results of he and his team getting their “hands dirty,” thus earning them the respect of their customers, many of whom have elevated them to full-partner status as opposed to simply a supplier. And when not visiting customers, Bassoul spends much of his time at Middleby on the factory floor, observing the manufacturing process of the company and talking with the employees, many of whom he knows by name.
“I strongly believe that the bottom of the organization is an often-overlooked resource,” Bassoul explains. “Our assembly workers, fabrication employees, and quality control can truly ‘move the needle.’ We have workers who started out in the factory assembling products that are now managers and vice presidents. I am proud of the fact that we currently have a 98 percent employee retention rate.”
“When I say that I’ve been one of the longest serving CEOs among Fortune 500 companies, people look at that, and they say, ‘Fantastic, you’ve done it,’” he said. “But then they say, ‘Should he stay or should he leave on top?’ I also ask myself that question. But I find that we’ve been able to reinvent ourselves again and again, and this current phase will be our fourth transformation in eighteen years.”
Bassoul ultimately believes that keeping an eye on the broader picture is crucial to building a successful business in any industry. For example, Middleby is now a leading robotics company in the U.S.
“I like to talk about the future,” he said. “I think that there are many interesting things to be discussed about the future of water, automation, and robotics, but also things such as demographics in emerging markets and the rise of mega-cities with populations of over 10 million people in different parts of the world. When looking to the future, this has to be taken into account, not only at Middleby, but also at many other companies, regardless of the industry you are in.”
For example, Bassoul estimates that 70 percent of jobs at U.S. hotels will be automated in the next seven years while 60 percent of the tasks workers perform in most restaurants today could be automated using currently available technologies. As such, Bassoul says he believes in not only embracing change, but also anticipating it.
A desire for innovation
Innovation has been critical to Middleby’s success post-recession with the company particularly focusing on water saving solutions and waste management, two major issues for the restaurant and food equipment industries. “With the exception of agriculture, restaurants are the biggest consumers of water in the world,” Bassoul said. “Our waterless steam technology and water cutting systems, which are state-of-the-art, have saved our customers so far between a billion and-a-half to two billion gallons of water, and we aim to save them ten billion gallons by 2020.”
Meanwhile, in the area of waste management, Middleby has produced innovative and award-winning equipment, such as the IMC WasteStation which enables customers to reduce food waste volume and cut collection costs by up to 80 percent.
“I believe that for technology to make sense, it has to touch lives in a big way,” Bassoul said. “We are currently delivering some never-before-seen innovations to the residential kitchen through our Viking, AGA, La Cornue, and other residential brands. Our Viking refrigeration has patented anti- mold and anti-bacterial technology proven to extend the shelf life of food for weeks.
“Our Viking rapid cook technology is the fastest oven in the world with the ability to cook a frozen turkey to the point of ready-to-serve in just 20 minutes. Our residential convection ovens require no preheating, eliminating 20 to 25 minutes from the cooking time.”
The importance of emerging markets
When he was first named CEO of Middleby, Bassoul, who is of Lebanese descent, already had considerable experience working in emerging economies in Asia and the Middle East. He believes this experience was crucial in helping him understand how to best position Middleby in these growing markets. Both as CEO and during his previous role as COO of Middleby, Bassoul’s experience was key to the company’s increasing global presence, which saw them move into the Philippines in 1996, China in 1999, Mexico in 2000, and India in 2003.
“I spent many years living and working in the Middle East and Asia, specifically China, and that gave me an appreciation of how emerging markets work,” he said. “I also spent eight years in healthcare with American Hospital Supply and Baxter Healthcare where innovation is literally at the forefront of the industry. I used these experiences as a foundation when I joined Middleby.”
As such, Bassoul is currently working to reinvent Middleby as a global leader within emerging markets where, according to recent statistics, 85 percent of the world population will be living by 2030.
Partnerships built to last
Bassoul lists twelve key suppliers that have been fundamental to the company’s success and highlights three essential elements to the strategy that Middleby employs to build such alliances, namely partnership, growth, and innovation.
“The challenge I see is creating a centralized purchasing function without disrupting the entrepreneurial and decentralized spirit that made us who we are,” he explained. “This growth not only involves our employees and our customers, it also involves our suppliers. Basically, we’re asking our suppliers to share our vision in order to meet our goals and fulfill our purpose.
“For example, it used to take us between 18 and 24 months to introduce a new product to market, but today we’re doing it in less than seven to eight months,” he said. “And the reason we can achieve this is because our suppliers are involved with us right from the conceptualization of the product. My attitude toward our suppliers, especially as we become bigger, is that we ourselves have to be the right partner, it has to start with us.”
Ultimately, Bassoul believes that keeping up with current developments in both business and the world more generally, particularly technology, is crucial to companies staying ahead of the game.
“The big challenge right now is the same for every business: digital disruption,” he insisted. “We have to come to terms with the fact that the digital world is here.”
It is an attitude and philosophy that has not only helped Bassoul remain one of the longest serving CEOs around today, but also fills him with the hunger and drive to go on transforming one of North America’s leading companies.
“Why did I pass the average tenure of CEOs, which, among Fortune 500 companies, is around four years, to stick around for eighteen?” he asks. “Because many companies try to transform themselves and they fail, mostly because they lack the courage to act swiftly and boldly.”