EPISODE #087

The "Discovery" Process: How R&D and Customer Support Fuel Sustainable Growth

With Guest Dan Shute

Why building systems before you need them might be the secret to sustainable growth.

The How to Sell More Podcast

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October 23, 2024

Meet Dan Shute, a mechanical design expert who, along with his co-founders, transformed a basement startup into Volant Products—a mid to high eight-figure global powerhouse in oil and gas technology. As President and CEO, Dan sits down with Mark Drager to share the raw truth about building a company that's revolutionizing how the energy industry handles casing installation. Dan breaks down the real challenges and victories of scaling Volant from its humble beginnings to serving customers across 50 countries with a team of 150. But this isn't your typical success story—it's a masterclass in sustainable growth and innovation.

If you're tired of the "grow fast or die trying" start-up mentality, this episode is for you. Dan breaks down why avoiding mistakes might matter more than making brilliant moves, and how building trust-based relationships beats quick sales tactics every time. It's a refreshing take on business growth that puts relationships and long-term thinking first.

I think our success is driven more by how few mistakes we've made, rather than how many times we've been brilliant. If you can consistently avoid big problems, you're less likely to find yourself crashing and burning. -- Dan Shute

Listen to The Episode!

Top 3 Reasons to Listen

Learn about sustainable growth: Dan's approach to building a mid to high eight-figure company without debt while maintaining innovation offers a refreshing alternative to the typical "grow fast" start-up mentality.

Understand effective product development: The real-world example of evolving their flagship product over three generations demonstrates how patient, customer-focused development leads to lasting market success.

Discover practical leadership approaches: The concrete examples of balancing control and autonomy, while building an empowering culture, provide actionable insights for leaders at any stage.

Follow Dan Shute on Social

Website: https://www.volantproducts.ca/

LinkedIn: https://www.linkedin.com/in/dan-shute-0115a71b/

More About Today's Guest, Dan Shute

CEO and President at Volant Products Inc.

Dan Shute is the President and CEO of Volant Products Inc., a leading innovator in well construction technologies for the oil and gas industry. With over 25 years of experience, Dan along with his team has been instrumental in growing Volant from a basement start-up to a mid to high eight-figure global company serving customers in over 50 countries.

As one of Volant's original founders, Dan has a proven track record of driving innovation, building strong relationships, and expanding into new markets. He holds a Bachelor of Science in Civil Engineering and is a licensed Professional Engineer.

Under Dan's leadership, Volant has developed ground-breaking products that solve complex industry problems through innovative R&D. His approach emphasizes continuous improvement, quality service, and building a strong company culture.

Dan's expertise in mechanical design, tubular connection qualification, and casing system installation has enabled him to envision creative solutions that help customers succeed. His collaborative leadership style, which values integrity and clear communication, has been key to Volant's sustainable growth and success in the energy sector.

Key Takeaways

  • Customer-centric problem discovery - Success comes from identifying expensive problems through deep customer engagement, developing solutions through careful iteration, and maintaining close relationships with customers to continually refine products. This long-term approach to R&D and product development leads to better market fit and sustainable growth.
  • Strategic approach to sustainable growth - Building a successful business involves avoiding major mistakes rather than pursuing rapid growth, staying debt-free for flexibility during industry cycles, and developing robust systems before they're desperately needed. This conservative approach enables long-term stability and success.
  • Trust-based organizational culture - Creating lasting success requires building a culture of empowered employees who understand company values, combining centralized control in critical areas with decentralized autonomy in customer-facing roles, and hiring people who are humble, hungry, and smart.

A Transcription of The Talk

Mark Drager: Dan, thank you for joining us. You represent a type of entrepreneur we rarely get to hear from – someone who's grown a $50 million-plus privately held company in oil and gas engineering over decades. I'm excited to pick your brain and learn what it takes to build a business like Volant Products. Our listeners are in for some valuable insights.

Dan Shute: Oh, it is my pleasure, and thank you for the invitation, Mark.

Mark Drager: And so for our listeners who may not be in your industry, can you explain what Volant Products does? What industry are you in? What do you do? Who are the clients that you service?

Dan Shute: Yeah, absolutely. We serve the oil and gas industry, and for people who are outside the industry, one of the key things that happens is drilling. Contractors drill a hole through the earth down into a hydrocarbon-bearing formation, and the first thing they do is put a pipe in the wellbore. Then you pump cement down the inside of the pipe, it comes back up the annular space between the wellbore and the pipe, and it hardens up. That casing, as we call it, becomes a permanent part of the well.

We get involved in enabling others to install the casing more efficiently and more effectively than they are able to in other ways. We are the world's experts in casing system installation technology, and we embed our technology in hardware, software, and services to help other people successfully get the casing all the way to the bottom of challenging wellbores.

Mark Drager: And so when I was learning about your company, and when we were speaking a little bit before, gosh, I don't remember, and I apologize, maybe this is from Armageddon, but I feel like at some point I've seen a movie where someone explained the fact that if you took a straw into a milkshake, turned it upside down, and slowly pushed it in—and you know those straws, listener if you can imagine those straws where you're able to kind of adjust things, yeah. I mean, today, oil and gas wells are dug hundreds and thousands of feet down. They're dug like these snakes or these straws that have to go around all kinds of things. And your customer isn't the oil and gas company, your customer isn't even the well operator if I'm not mistaken. Your customer is the contractor who's brought in as a specialist simply to help dig the wells or get these straws deeper into the earth. Is that correct?

Dan Shute: That's really close. There are companies who are drilling contractors—they're the ones who operate the rigs that you see in the field when you're driving through the oilfield. We do serve them as well, but our main customer is actually the service company that sends people and equipment out to install the casing into the wellbore. We do sell directly to the oil and gas companies from time to time, but the majority of our customers would be in the service provider category.

Mark Drager: I see. So you've found your niche in serving these specialized service providers. That's really interesting. Now, I'm curious about how Volant Products got its start. How did you identify this specific market need and begin developing solutions for it?

Dan Shute: We actually had a vision for discovering expensive problems that we thought we had the ability to solve. We started out doing engineering consulting, which is a fantastic environment to be exposed to challenging problems. As we discovered what we thought were viable solutions, we would go back to our customers, and tell them what we thought we could do for them. And they said, "That sounds like a good idea. We'll give you a try."

At that point, as an entrepreneur, you do what you need to do to deliver on your ideas. It's a very high-energy spot to be in, and you're willing to work ridiculous hours for very little money. Enough to feed, clothe, and house your family is a good threshold, and you invest everything back into the business to execute the dream that you've got.

Mark Drager: And so, having established the company, growing the company, moving from an engineering consulting firm where you're basically for hire to developing your own products, and then over the last... How long has it been? 20-plus years? Is that correct?

Dan Shute: It is. It's 25 years. We started actually working out of our basements. When we were finally able to afford an office and actually come in and have coffee together in the morning, that was a milestone. When we came up with our first product idea, we actually bought a lathe, hired a machinist, and we had one product, one customer, and one employee. We started making stuff. It sounds riskier than it was because if it hadn't worked out, we'd have just sold the lathe and found something else for the employee to do—or hopefully not let them go because we try to make enduring commitments to the people we bring on.

So, if you do a good job for your customers, and they realize value in what you're doing, they give you a chance to do it more. We went from one lathe to two lathes and a mill. We had opportunities to do more interesting things while continuing the engineering consulting in parallel. That served as a fantastic, fertile field for ideas to germinate and take shape, and our customers gave us the opportunity to keep doing what we were doing. When you do it well and have a new idea, they're more likely to say yes to your new idea. I think that's the genesis story.

Mark Drager: That's remarkable. It's remarkable that you were able to establish the firm, grow the firm, and that your company is the size that it is today. I think the reason I'm saying that is because so few people are able to grow a company over the course of decades. Either they want to go much faster, they want to get much bigger, they crash and burn, they're over-leveraged, they exit, or they grow through acquisition. What would you say, if you had to boil down your secrets of success, are the one or two areas that have allowed you to be competitive and that you attribute a lot of your success to?

Dan Shute: Sure. I think our success is driven more by how few mistakes we've made, rather than how many times we've been brilliant. If you can consistently avoid big problems, you're less likely to find yourself crashing and burning. We've never had debt, for instance. People will tell us that we could have grown faster if we had leveraged other people's money. Debt is actually cheaper than equity.

But our observation is, yes, that may be cheaper, but which one is friendlier in a downturn? The oil and gas industry is notoriously cyclical—there are ups and downs, and our revenue goes up and down dramatically. Not having debt that requires monthly payments frees us up tremendously to invest in the business during slow times and to be positioned for success when things pick up, which they inevitably do.

I don't want to discount the value of good ideas, because good ideas are a key part of what differentiates us from our competitors. But good ideas by themselves are necessary but not sufficient for enduring success. I would also argue that being more concerned about satisfying your customers and enabling them to succeed—being more interested in that than generating maximum profits for yourself—is another cultural piece we've consistently observed.

One of our founders said that if we consistently focus on doing the right things for the right reasons—looking after customers, treating them the way we'd like to be treated, and making sure the problems we solve are much more expensive than the solutions we provide—then financial success is almost impossible to avoid.

Mark Drager: Dan, I love how you've emphasized the importance of focusing on customer success and doing the right things for the right reasons. It's clear that this approach has been crucial to your long-term success. But I'm curious – how do you actually identify those "right things" to focus on? In other words, how does Volant go about recognizing and selecting the problems that are worth solving?

Dan Shute: Part of it is recognizing an expensive problem that you have the ability to solve. I'm not sure you can plan for that—you can expose yourself to an environment that is problem-rich, which is what a consulting business does. But when you recognize something that you think is an expensive problem and believe you've got the capacity to solve it, you need to find a way to discover whether or not you're right.

We've probably had more misses than hits, but the magic is not betting the whole farm on the miss. A key flagship product line for us is something called the Top Drive Casing Running Tool. This attaches to the top drive of the drilling rig, and the top drive is the part that goes up and down and screws the pipe together while pumping drilling fluid through it. In this case, we saw customers trying to use the top drive to make up or put together, threaded connections for casing. The way they were doing it was actually wrecking the casing. We got a consulting job to figure out why this was happening so they could make it stop.

We figured it out, and on the way back from the job, we had a lot of time to think, and the thought was, "There's got to be a better way to do this." Instead of screwing something into every connection and putting a bunch of load through it, which makes it easy to damage the threads—because threads are delicate—wouldn't it be great if there were a tool that just attached to the rig, grabbed the pipe without touching the threads, and allowed you to apply torque and hoisting loads and pump fluid through the center of the tool? Wouldn't that be great?

So, we came back, talked about it, and said, "Yeah, we think that would be great, and we think we can do it." We built a prototype, showed it to people, and they said, "Yeah, let's give that a try." We discovered all the things that were wrong with that prototype.

In fact, we've changed the architecture twice. The tools that most people see today are the third generation. It took us probably a solid decade to get to market. The first tool that most people have seen from Volant is the third generation of our technology. So, there's a willingness to know when to discard technology that isn't hitting the mark, and there's a need to listen to your customers. We call it the ecosystem because it's more than just people—it's the workplace, the drilling rig. It might be hot, it might be cold, and there might be angry people on location who yell at the people who bring the tools out to the rig. There might be people who know and trust you and will let you make a mistake that costs them money because they know it will be worth it in the long run.

So, it's these factors that fit together to help you figure out whether your idea is workable, whether it's something your customer truly needs, or whether you just think they should need it. And even if they do need it, but they're not willing to pay enough to make it viable for you, if you go too far down the road without understanding your customer's problems, you're probably going to be disappointed with their level of excitement.

Mark Drager: This is... I mean, I don't know if you'll want me to release this because of what you just shared... The biggest challenge I feel that sales, marketing, and business development in any company face, and this also applies to product development, is just not being close enough to the real problem, the real customer, the real use case. You just don't understand it.

In my agency, SalesLoop, we have a similar thing. We have a consulting side of the business where we come in to solve really complex problems and challenges for our clients, which I love.

They bring these challenges to us, and I find them interesting. Many consultancies do that. But then we have a production side of the business as well, and I hear you describing something similar. Not only can we be really close, coming in as a consultant and helping to solve complex problems, but for the right problems, and the right challenges, we believe we can develop solutions for. We can move that over to R&D, productize it, and then use future consulting or client relationships to test it in the market. And even though this is extremely slow and expensive, in my experience, it develops a far better product-market fit.

As you mentioned, over three generations, over 10 years, you've been able to slowly chip away at the solution. Most people will try to license something, acquire something, come up with something, see there's a huge market, build it all, spend a ton of money taking it to market, and then find out they have zero market fit. It's a very expensive way to go about it.

Dan Shute: It really is. There's a process—and I think it's almost what a Stage-Gate process is intended to do—where you take a step, check to see if it was a good step, and then decide whether to go on. I think, particularly in the early stage for us, that process is happening continually, on a daily basis, in the heads of people who are discovering the design. I use that language on purpose because I believe you discover problems. Sometimes you create problems, but that's a different interview. You discover things that should be different, and to have a well-conditioned understanding of how things should be—and then to discover a mechanical design or software strategy that actually solves that problem—is a key piece for us.

We hold many patents, but we've realized that the difficulty of manufacturing what we do is almost better protection than patents in many cases. If you can't make it, you can't copy it. Then, once you've made it, you discover how to put it in the hands of people and see how they use the tools, and that feedback loop continues. I don't think we ever stop, actually. We're still listening to our customers. Right now, one of our guys is in Dubai talking with a national oil company about a new design we think could solve a significant problem they're experiencing.

Mark Drager: Have you ever gone to a customer with an idea and had them rebuke the fact that you're doing all this work for free? Because I've always preferred co-inventing new products, new services, and new SOPs with my clients. I'll set up a meeting, ask them what we intend to do and how it's going to work for them and ask for their help. I've never had a client push back, saying, "No, Mark, please don't make this thing even better for us." Somehow, it's not something that ever happens, is it?

Dan Shute: No, I don't think so. I've heard people say, "Gee, it costs too much," but what is "too much"? If I buy this and it's going to put me out of business, for goodness' sake, don't buy it. But the majority of our customers buy something from us and find they can make a lot more money than it cost them to buy the equipment, so they come back and buy more. To your point, I can't think of a customer who's ever said, "Your equipment is good enough. I want you to stop improving it." Continuous improvement and the willingness to obsolete your own stuff are part of what goes into technological excellence. It's hard to displace you if you're constantly improving what you're doing.

Mark Drager: And so I know another one of your keys to success at Volant Products is customer service, and your focus on customers—your focus on going above and beyond. I think you shared with me a story that kind of demonstrated how far you're willing to go. Can you share that with me?

Dan Shute: There are probably many stories. The one I remember is a case where we had a customer in the northern U.S. who had an opportunity to win some new work, but they needed some parts for their tool to enable it to do a different size of casing. We gathered the parts and shipped them down to the customer, but when they tried to assemble the tool, it didn't fit right. They called us and said, "Hey, things aren't fitting. What's going on?" We had a conversation and realized that one of the parts had been manufactured incorrectly. So we said, "That's our fault. We're going to make this right."

Mark Drager: Downtime is a really big deal, though, in your industry, right?

Dan Shute: Well, these guys weren't on the rig yet. If a rig has to wait, that's a really big deal. The time pressure here was that the job was coming up on Monday, and it was Friday afternoon. So we had a few days to get this right, but it was the weekend, and it needed to be right when they showed up on Monday. If the rig had to wait, it would be a big deal. The spot we found ourselves in was that we had made a mistake, we had delivered it to the customer, and there was no way to solve this except to put the correct part in a truck and have one of our guys drive from Edmonton down to where the customer was. That's probably a six- or eight-hour drive, but it fits into a weekend.

So, we delivered the parts to the customer with an apology for getting it wrong, and they were able to complete their job successfully. That was one of our early lessons in how important it is to own your mistakes and to do what is within your power to make it right for a customer. The way you respond to a problem is actually more powerful in relationship-building than never making any mistakes could be.

Mark Drager: So the reason why I brought this story up is because, in my experience, owner-managed companies—especially when you're small—can easily compete against any other player because you're willing to give more time, more effort, more focus. You can literally walk through your shop and say, "You know, Bill, please get in the truck, go to this address, and drop it off." Yes, you're in 50 countries, you have 150-plus staff. As an owner-led company, you have the passion, and you're there. But how do you handle culture, leadership, hiring practices, and employee empowerment to ensure that this kind of dedication and customer service happens at all levels?

Dan Shute: I love the idea of empowering people and having decentralized autonomy, where people know what the guidelines are, they know what the boundaries are, and they can do what's required to satisfy the customer within those boundaries. Almost every part of the company has an element of that.

It might be outside the scope of this interview, but I used to believe that company culture was either centralized control or decentralized autonomy—the freedom to do what you need to do. What I've discovered is that there's a need for both. In mission-critical business activities, typically in the corporate services space like HR, legal, IT, and finance, you need to have strong centralized controls so that you don't make mistakes. One mistake in any of those areas could sink the company. So, you need strong controls.

The more you're touching customers, either in a service or sales capacity, the more decentralized autonomy within limits is absolutely critical. If people know what matters most to the business, understand the beliefs and values of the business, and have the DNA to process that information in real-time, you've got a fantastic recipe for empowerment.

Once in a while, you stumble on a phrase that captures what you're about, and it becomes powerful. You start to hear people saying it back to you and to each other. At Volant, one of those phrases is, "We do the right things for the right reasons." This means it's not just about doing the right thing—it's about examining the motivation and rationale behind the decision. It's easy enough to understand, and it resonates with our staff.

You talk about leadership's role in driving culture. Culture isn't something you can prescribe or post on a wall. Culture lives in experiences and stories. Leaders need to understand the culture, understand the beliefs and values, and care more about getting it right than being right. When you do those things, you have the opportunity to live out your beliefs and values. It has to start from my office, and it has to be super strong in senior leadership. People see what you do more than they hear what you say. When they see leaders living out the values that they talk about, it lends credibility to the whole situation.

People want to be part of something bigger than themselves, in a spot where they can enjoy working, master their trade, and get better at what they do. This creates an environment where that can happen. I do a fair bit of reading as well, and Patrick Lencioni is one of my favorite business writers.

Mark Drager: The Five Dysfunctions of a Team—is that the one?

Dan Shute: Yeah, that's the first one that's on a lot of people's radar. He also wrote The Ideal Team Player. You asked about our hiring practices, and a significant part of our hiring process is looking for the ideal team player. Patrick actually apologizes in the intro to the book for asking people to buy the book just to hear what he has to say because, to him, it seems so self-evident. But when you think about the best team players you've ever worked with, they are humble, hungry, and smart. I don't necessarily mean smart as in a high IQ—you've got to be smart enough to do your job. The kind of smart he's talking about is how people interact with others.

Being humble doesn't mean being a doormat, but it does mean having the right view of yourself and not thinking you're the most important person in the company. Hungry means you're driven, and it's hard to have a great team when someone is just there for a good time—they want to win. People who are smart about how they work with others are pure gold on a team. So, we actually spend energy looking for people who are humble, hungry, and smart. We have a series of questions designed to draw out those attributes in the people we're considering hiring.

Mark Drager: Now, if you're listening to the conversation that I'm having with Dan, and you're thinking, "Mark, this is How to Sell More, and you guys have not talked about marketing or branding or advertising or tactics or sales or going to trade shows or brochures or any of that stuff." Like, yeah, we haven't talked about any of it. There's a method to my madness here, and that's because, you know, in the work that I do as a brand strategist with SalesLoop, a big part of what we're always looking at is: what is the differentiator? What is the thing we're going to hang our hat on? What is the actual underlying ethos, or that thread that we can pull on—that secret sauce?

Because yes, products are products, and features and benefits and pricing and market fit and problems we solve—this is all standard stuff we could be talking about. But the reason I wanted to have this conversation today is because it's clear to me from the few conversations we've had, Dan, that in your industry, you've focused on customer service and understanding the customer problem. You've focused on engineering the very best solutions and providing the very best customer service possible, which also comes from hiring practices and culture.

So, all the other stuff we could talk about—like what trade shows you go to, how is your sales team structured, and all of that—is great. Correct me if I'm wrong, but it doesn't sound like that would be the thing that we would be hanging our hat on. It's really about understanding the problems, creating really great solutions to complex problems, continuous R&D, continuous engineering, continuous development, continuous investment in the tech, and continuous investment in the right people. And when you bring that all together, it makes marketing's job or sales' job or business development's job just a little bit easier because the thing that you're known for is your level of service, your quality of products, and everything that comes with it. Is that correct? Is that a fair assessment?

Dan Shute: I think that's spot on. Absolutely.

Mark Drager: And so if you're listening and thinking, "Well, I came to hear the tactics because I want to grow fast," what would you say to that listener, Dan?

Dan Shute: I described a bit about the startup phase and the entrepreneurial phase, where you're so excited, that you're working ridiculous hours. For us, there was a phase where we couldn't keep up with demand. It was really just a matter of how we could grow in a way that stays organized. How can we make sure our quality systems and business systems keep up with the growth? This goes back to not making mistakes. A great way to disappoint customers is to make mistakes. I just finished telling a story about how a mistake turned into a positive experience, but if that happened every time they bought something from us, it would be a really good reason for them to shop somewhere else. We try not to give people reasons to shop somewhere else. So, making sure your systems are robust enough for the scale of the business is crucial.

Interestingly, it's way easier to build systems before you need them than after it's too late. It's a little bit like trying to build a bridge as you're crossing the river or building an airplane as you're trying to take off. Those things are very, very challenging. If you can hire people who've been there before or talk to people who've been there before you and learn from them—mastering the best of what others have already figured out—those are healthy habits to build that will enable more stable growth.

If we're going to talk about sales tactics, I think having customers trust you is invaluable. For our salespeople, it's about listening really well and understanding the customer's situation. For us, it's less about listening so you have time to think about the next thing you're going to say or how to get the customer to want what you have. It's more about listening to understand and asking questions that help you get inside the customer's shoes and live their experience with them.

If what you discover is that there's not a great fit with what we offer, we're pretty honest about that. In some cases, we'll recommend a different product, even if it means we don't make the sale. We might say, "You probably need this instead." You don't make the sale, but you do build trust in the relationship. When they eventually need what we offer, we'll be one of the first companies they call because they don't feel like they're being tricked into spending money. They feel like they're being invited into a relationship where it's not a win unless we both win.