How To Follow Your Customer

Many management gurus say the best course to successful business expansion is to follow your customers where they want to take you. Bobby Mesmer has always followed that philosophy, and continues to do so—even when he is the customer. And that’s why he’s leapfrogging from running an erector of manufactured buildings to starting a luxury travel-services company.

Mesmer always has spread himself thin anyway. He was a race-car driver for many years and ran a corporate motorsports team. Along the way, he founded and built RMG Erectors & Constructors into a $150-million-plus business. Now he believes he can crack the market for black-car luxury SUV and jet services.

“One thing I’m very good at is tweaking businesses and developing them and disrupting the market we’re in to create something different,” Mesmer tells Chief Executive. And there are lessons for other CEOs in how he does it.

After years of assembling structures from other companies’ components, Mesmer’s latest gambit was for RMG to vertically integrate and begin sourcing its own steel panels and other parts of the pre-engineered metal buildings the company erects and constructs all over the country. These structures serve as the shells for warehouses, airplane hangars, retail stores and data centers.

Now, after obtaining private-label building components from 14 contractors to grow his company’s new service, Mesmer is considering the even more vertical strategy of actually manufacturing RMG’s own components, creating a truly soup-to-nuts, turnkey supplier of these buildings.

Pre-engineered metal buildings comprise a $13-billion market, Mesmer says. His company stands up a fully engineered structure and finishes it out for clients, right down to the roof, insulation and trim. Mesmer grew RMG into the world’s largest such company, with headquarters in Missoula, Montana, and major operations in Sewell, New Jersey, and Franklin, Tennessee.

And that was before the industry began changing recently, as makers of the steel panels for the buildings chased deals by selling directly to customers rather than to middlemen such as RMG. They were cheaper, but without an associated network of dependable erector and constructors, quality went south.

“End users and general contractors were buying buildings thinking it was saving them money, but it actually was costing them money,” Mesmer says. “There is more to the process than just buying a building. Customers think they’re buying a kit, but they’re not. They’re buying a truly engineered product. There’s stuff you have to do on site to make sure you’re getting what you think you’re getting, or the building doesn’t come out right.”

So Mesmer decided RMG would put together its own turnkey packages and set up its own network of manufacturers to supply components. The new approach has sent business booming, helping make Mesmer’s decision last year to retire from his role as CEO and founder—and sometimes driver—for Iron Will Racing and focus on RMG Erectors & Constructors. Along the way, the peripatetic Mesmer also came up with a play for the luxury travel market in RMG Luxury Services.

Here are some principles he works by:

Listen to your customer. RMG’s approach to putting up metal buildings was working fine, but steelmakers’ play to undercut the industry’s existing structure was roiling the field and leading to dissatisfaction with the end product.

“Our customer base came to us and said, ‘We’re sick and tired of this. Would you consider selling us the building as well as putting it up?’” he says. “We modified the model to what we wanted to be and just started implanting it. We made mistakes and corrected them and just kept building.”

Pursue sensible paths. When the notion of vertical integration came up and the market seemed to be demanding it, Mesmer only pursued such a major strategic shift because knew it made sense for capabilities that RMB already possessed.

“I knew we had the expertise: We’re the largest in the world at this business and we know what the end result is supposed to be,” he says. “

Leap into adjacencies. While racing and erecting were his main worlds, Mesmer also believed he saw a business opportunity in another arena where he spent a lot of time: business travel.

“How many stories have you heard where black-car services of Uber and Lyft end up leaving customers without a ride?” he says. “There are needs to fulfill in an industry that’s run like crap.”

So Mesmer started RMG Luxury Services to properly coddle high-end travelers in private aviation—and maybe expand into private yachting. Many questioned his idea for jumping into a crowded market and the risks of diverging from his core business, but he had a vision for redefining standards and setting new benchmarks in a fast-growing business that he understood viscerally as a customer.

“It’s not a hard business to understand,” he says.