Octane Fitness, Inc.: The Power of Focus

This case could be used in entrepreneurship and strategy courses. It's the story of two men, already working in the physical-fitness-equipment industry, who build their own business designing and producing high-quality fitness equipment. The power of planning, strategic focus, disciplined adherence to core competencies, outsourcing, and aligning HR policies and rewards with the strategic focus are illustrated in the case. Excerpt UVA-ENT-0141 November 27, 2009 OCTANE FITNESS, INC.: THE POWER OF FOCUS Octane Fitness, Inc. (Octane), based in Brooklyn Park, Minnesota, was a privately held company specializing in the design and distribution of elliptical cross-training machines for the commercial and consumer markets. Cofounders Dennis Lee and Tim Porth launched their business in September 2001, after leaving their jobs at the national exercise-equipment manufacturer, Life Fitness. The two men pooled their savings, mortgaged their homes, and set up shop in Lee's basement, with the goal of developing the best elliptical-exercise machine on the market. In November 2002, Lee and Porth delivered four ellipticals to 2nd Wind Exercise Equipment, an Eden Prairie, Minnesota-based fitness specialty chain. The first unit sold less than an hour after the retailer had put it out on the floor. In the following weeks, Octane's 2002 sales climbed to $ 280,000, from the 38 stores in five states selling its ellipticals. By the end of 2003, the company had 40 dealers and 210 stores in North America and had made $ 6.9 million in revenue. In January 2005, North Castle Partners, L.L.C., a private equity firm based in Connecticut, bought a majority interest in Octane. With Lee at the helm as president and CEO and Porth working as executive vice president for product development and marketing, the business continued to grow. By 2008, Octane was a global operation with 50 employees and offices in the Netherlands and the United Kingdom pulling in $ 41 million in sales. . . .