John Lowery on his company’s history, culture, growth initiatives, and succession plan.
Top: From left to right: CJ Cannata; John Lowery, CEO, Applied Imaging; Frank Cannata; and Casey Lowery, director of Sales, Applied Imaging; standing before the dealership’s “Applied Chemistry” display in the main foyer. Applied Imaging developed “Applied Chemistry,” or what the company refers to as “Elements of Success,” as opposed to core values. With a creative and innovative concept inspired by the periodic table, Applied Chemistry began with an initial three Elements of Success – BTU (Build Team Unity), Fn (Fun), and HTN (Hit the Number). The company’s leadership team expanded the original three to the current 12 eight years ago.
Middle: Applied Imaging headquarters in Grand Rapids, Michigan.
Above: Customer Loyalty Center Stats and Tech GPS Dashboard
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The common denominators for becoming a $100-plus million dealership are plentiful. For many dealers, their story generally starts with selling copiers for a major company. For John Lowery, president of Applied Imaging in Grand Rapids, MI, it started in 1976 at Hovinga Business Systems, a Canon dealer.
Lowery had his sights set on ownership, but because Hovinga was a family-owned business, that opportunity wasn”™t there. After nearly nine years at Hovinga, he moved across town to Multiline Business Systems. After a year and a half with Multiline, Lowery worked out a deal to acquire inventory and launch Applied Imaging. It was an ambitious endeavor. He and his wife had just $500 in savings and two young sons. Lowery borrowed $5,000 and took out a $50,000 line of credit on the equity in their house to invest in the business.
“We needed to focus on growing the business so that we could compete with the manufacturers,” recalled Lowery. “We felt we needed to grow to $10 million to give us the resources we needed.”
This was a time of transition in the industry, an era when mega dealers were emerging as a threat to small independent dealers.
But Lowery persevered, putting in long hours and growing the business despite starting underfunded. Ten years after taking ownership, he told a reporter in 1997 that his goal was for Applied to have offices across Michigan and establish itself as a $100 million company.
He had his doubters after making this claim, but during our recent visit Lowery reported Applied Imaging is finally going to exceed that goal this year, having more than doubled its business since 2014 when it was a $49 million dealership.
Strategic Acquisitions
In 1999, Applied Imaging moved into a new corporate headquarters in Grand Rapids. That same year, the company opened an office in Kalamazoo and subsequently made its first acquisition, Ryle-MicroAge, also located in Kalamazoo. Lowery’s hard work was paying off.
In 2013, Applied Imaging’s Traverse City office opened and awards from the community and the industry started rolling in. Over the years, Applied has been acknowledged by Best and Brightest Companies to Work For on its national, Metro Detroit, and West Michigan lists.
Ricoh was Applied Imaging’s primary line for its first 20 years of business. In 2007, the company partnered with Canon and added the Kyocera line, strengthening its managed print services offering. HP was another addition, and the combination of HP and Kyocera now provides Applied Imaging with a strong A4 offering. This mix of brands also supplies the company with the technology to fully address the market.
Lowery inherently understands the next necessary step to grow the business. In 2014, Applied Imaging launched Netsmart Plus, the dealership’s managed network services division. A year later, the company acquired Total Electronics and opened an office in Petoskey, Michigan, followed by another in Ann Arbor. Each acquisition has helped Applied Imaging extend its footprint into new markets.
Two more acquisitions in 2017 further contributed to Applied Imaging’s growth. That same year, Applied Imaging was one of 21 dealers selected to acquire Ricoh’s SMB MIF, leading to the addition of 40 sales and services personnel. In 2018, Applied Imaging completed two more acquisitions.
Through its relationship with Canon and Ricoh, Applied Imaging has a strong production print offering. That division is led by Lowery’s son Kyle Lowery, the company’s director of production print.
From our perspective, the steps Lowery took to grow the business were not all that unusual. He started the company by building a solid foundation, followed up with a series of successful acquisitions, established a services business, and took advantage of Ricoh and Canon’s high-volume offerings. The acquisition of Ricoh’s SMB MIF was another driving factor for Applied Imaging’s strong growth.
Creating a Culture
While the combination of strategic business initiatives has propelled Applied Imaging into the mega-dealer stratosphere, we also believe the dealership’s culture is a pivotal factor in its success. Lowery has created a culture that emphasizes the soundest and most fundamental of business principles, “hire good people and make them better.”
“We want to grow and protect the culture,” explained Lowery. “The company now has 412 employees, and that is going to be tougher to do. We”‘re all about the growth. We want to be growing rather than aging, but we also really want to protect our culture.”
When Lowery evaluates a potential acquisition target, in addition to the ledger sheet and the products it sells, he pays close attention to the company’s values.
“Do they overlap and how do we overlap so that we can assimilate?” he explained. “We’ve walked away from some deals because we felt it wasn’t a good fit.”
Fifty percent of Applied Imaging’s workforce comprises millennials. One of those millennials is Lowery’s son Casey who serves as Applied Imaging’s director of sales. Casey understands the company’s objectives but not at the expense of sacrificing the values of the business and his family. He is proud of his father and what he has built, and Casey is also respectful about how it all came about.
“As long as we can continue to hold on to our culture, we will meet our goals,” stated Casey. “Growth is a mindset–whether or not your revenue is growing. We are actively trying to make sure we are relevant for the next 30 years.”
One way, Applied Imaging is looking to remain relevant is by selling new technologies. While Casey doesn’t think print is going away, he is mindful that office printing is declining. Applied Imaging’s MPS and managed network services offerings are two ways the dealership is addressing this challenge. Production print is another strategy the company is tapping to make up the difference.
Casey understands the business is changing and is consistently weighing the impact Amazon and other large entities may have if they make a push into this space.
“But if you go down the street and you knock on doors, no matter what, people still want to deal with people on a face-to-face basis,” he said. “People still appreciate that connection.”
He’s also working to enhance communication within the dealership to address whatever challenges are coming the company’s way. To encourage open communication and support the company’s culture, Casey introduced a concept called “Open Spaces,” a way for employees to meet and share ideas. Employees are divided into groups of eight or nine to discuss topics of interest or their respective areas of expertise. At a recent all company sales meeting, 27 new ideas were presented.
Looking to the Next Generation
Lowery has a succession plan in place to ensure Applied Imaging’s future. He is looking to Casey to take over as COO in 2020. Initially, sales and service will report to Casey, and after that, the CFO and HR. While Casey will be leading the company, Lowery stated the company plans to transition to more of a team management approach. Lowery expects to remain at Applied Imaging another couple of years beyond 2020, evaluating how everyone is doing as a team.
“We’ve got new people coming in underneath Casey [and I want to see] how they envision, plan and grow,” said Lowery.
With experience, a strong mentor in his father, and an eye to the future, Casey is poised to continue Applied Imaging’s legacy as a customer-focused dealership.
“You’ve always got to be relevant,” said Casey. “These are the things we want to transfer to the next generation. If we start there, John can walk away and it will be a successful transition.”
Top:John Lowery (right) congenially shares some stories behind some of the awards and accomodations he and his company have received over the years.
Above: Applied Imaging’s Production Print Center is an active customer overflow print center set up to feel like a print shop.
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