CEO John Solheim and Ping execs faced a challenge: Change or become irrelevant. Oh, how they’ve changed

Ping is hot again, but it’s hard to tell from talking with John Solheim. The chairman and CEO of Karsten Manufacturing, the equipment maker’s parent, is a phlegmatic 59-year-old who is as inscrutable as his golf clubs are distinctive. Whether the topic is his collection of fast and powerful vehicles – which includes a ’69 Corvette, ’96 Dodge Viper, a couple of Harleys and a new Mercedes E55 – or the innovative and quirky company created in the 1950s by his father, Karsten, Solheim rarely shows much emotion.

But Solheim has plenty to be happy about. Personally, he is well down the road to recovery following a kidney transplant last June. Professionally, he is presiding over a resurgence that has Ping flying high after a decade of slow decline. The company’s 2004 sales were in the neighborhood of $200 million, making it the largest family-owned golf equipment company, and its products are – as they once were – some of the most popular and playable in the industry. (As points of comparison The Acushnet Co., parent of Cobra, FootJoy, Pinnacle and Titleist, just reported 2004 revenue of $1.2 billion, while Cleveland Golf had fiscal year 2004 revenue of $126.8 million.) Nine Ping products made Golf Digest‘s 2005 equipment “Hot List,” including top honors for the G2 irons.

To gets its groove back, Ping blended the type of technological skill that first made its equipment stand out with marketing tactics both original and conventional. The result is a far cry from the wilting atmosphere of a decade ago, when internal strife in the corporation contributed to slowed decision-making and stalled growth. “I got fired a few times,” John Solheim says of his working relationship with his father, who died in 2000 at 88 after years of declining health. “And I left for a couple of days on my own one time, too.”

While Ping’s patriarch aged, its engineering-focused leaders lost touch with consumers and retailers and were watching market share slip away. “At the tail end of being a really hot brand, they were a really smug company,” says Carl Rose Jr., of Carl’s Golfland, the Detroit area’s largest golf retailer. Today’s lineup of Ping irons showcases the company’s longstanding engineering prowess, but more importantly demonstrates how the company has come to understand the evolving marketplace and what is necessary to succeed. In the early 1980s golfers would contentedly cool their heels waiting three to four months for a set of custom-fit Ping Eye2s, the most commercially successful iron ever made. Today Ping irons are customarily shipped within 48 hours. Moreover, the company currently manufactures three iron models (until 1996, it never had more than one design current in the market), the S59, the i3+ and the G2. Of the three, the S59 best illustrates Ping’s transformation.

In a 1986 interview Karsten Solheim said he saw no reason to make a blade iron. But, by the turn of the century, John Solheim knew differently. Tiger Woods was playing blades, and young golfers – whom Ping long had courted through active junior and college programs because they became key influencers as adults – wanted to play what Tiger played.

Ping G10 Range

The switch away from Ping’s more forgiving cavity backs was hard for the company to make, but the result was the S59, introduced in 2003. An investment-cast club (like all Ping irons), the S59 had the distinctive Ping blasted finish and no ferrule. It was a hit, as much as any blade can be given the market’s size. And last year the company came out with the S59 Tour, the same design but with a polished finish and a ferrule. In design the club was still a Ping, but in look fit squarely in the mainstream. Until a few years ago, no one in the industry would have imagined a Ping club could look like this, but then Ping always has charted its own course.

“We want to set the trend,” Solheim says. “You will never be the leader if you are just chasing.”

For many years, it was other manufacturers who were trying to catch up to Ping. When Karsten sold his first production putter in 1959, he wasn’t far removed from tinkering in his garage with Popsicle sticks and sugar cubes in an attempt to build a more forgiving club. The lack of computer-aided design software, however, didn’t prevent him from applying the scientific method. “Karsten revolutionized club design,” says veteran club designer John Hoeflich. “He looked at golf as pure engineering.”

Karsten eventually turned his attention from perimeter-weighted putters to irons, but his first attempts at milling forged blocks of steel into his cavity-back designs proved unsatisfactory. In 1969, outsourcing the casting of his designs, Solheim created his first production iron, the Karsten 1. When the opportunity arose to purchase a Phoenix foundry in 1972, Solheim took the plunge. It took two more years for the facility, called Dolphin, to be fitted to make clubs, as the company honored the foundry’s existing contracts. Even today, Dolphin still performs work for two of those original clients, Karsten Manufacturing’s only non-golf endeavors.

Word of mouth began to build through the ’70s for Ping irons (six Karsten models and the Eye), reaching a peak with the Eye2 in 1982. Combined with the already powerful putter franchise, Ping commanded more than 30 percent market share in each category by the late 1980s. The science for the Eye2, which placed the center of gravity in the optimal position, was indisputable. The clubs were in such demand people waited patiently, or otherwise, to get them – the time-consuming task of casting and finishing, plus company-imposed restrictions on shop allocations, limiting supply.

Yet instead of creating frustrated consumers, the effort required to obtain Pings actually increased buzz for the clubs, creating a cult-like feel. “I remember in the late-’70s a musician needed some odd specs on a set of irons,” says Leigh Bader, co-owner of Pine Oaks GC in South Easton, Mass., and 3balls.com, a large online golf store. “He waited 21 months for his clubs. If you owned Pings, you felt like you belonged to something.”

But customer loyalty wasn’t enough to halt Ping’s slide, which began at the company’s peak in 1987 with two unrelated occurrences. The launch of the Tommy Armour 845 iron, designed by Hoeflich, signaled that competitors were catching up, even though, as Hoeflich admits, the rest of the industry “is just imitating what Karsten did.” Simultaneously Karsten’s square-grooves disagreement with the USGA and PGA Tour over the measurement of clubface grooves burst into the public arena, adding to the distractions.

Karsten launched a failed attempt to make a golf ball, burning resources for 19 years before giving up in 1996. When Phoenix’ Moon Valley CC (former site of the city’s Ping-sponsored LPGA event and the course where Annika Sorenstam shot her 59) floundered, Karsten stepped in to buy it. The company invested in real estate, eventually owning a shopping center. Ping founded an apparel division in the mid-’80s and ran it until 1996. In 1999 Perry Ellis licensed the Ping name and still is making Ping Collection apparel, but John Solheim has succeeded in selling or shuttering all the projects but the two foundry clients, allowing the company to concentrate on equipment.

Greater than the energy diverted to ancillary areas was the challenge presented by Callaway. Just as the Eye2 transformed the iron market in the ’80s, the 1991 introduction of the Big Bertha driver shook the wood market. As Ely Callaway was bringing a mass-market marketing mentality to golf, Ping finally was coming out with an iron to replace the Eye2. Rose recalls Karsten, who also was slow to embrace metal woods, coming to Michigan to talk about the new club, the 1992 Zing. “I remember looking at him and asking what was different about this club,” says Rose. “He just looked at me and said, ‘It’s a new golf club, and it’s been 10 years since we had one. They’ll all buy it.’ ”

While the Zing did tremendous business in its first year – the company says that it was its biggest introduction ever – sales quickly dried up. The reason was simple, says John Solheim. Despite having a highly functional iron, “What we missed was optics. You need the proper look.”

The public face of Ping in the early ’90s was a company out of touch but still firing on its engineering cylinders. What was not as apparent at the time was conflict within the company. “The groove issue was extremely tough on [Karsten],” says John Solheim. And while the settlement John brokered with the USGA in 1990 was approved by Karsten, “he wouldn’t forgive me,” says John. “It made our relationship very drawn for quite a while.”

John, the youngest of Karsten and Louise Solheim’s three sons, began helping his father make putters when he was 14 but wasn’t getting paid. When he became a junior in high school, he applied for a job at a grocery store. “My dad wasn’t very happy about it,” says John, “so I started to get paid, $2.50 for every putter I built. And if I wanted to hire help, it came out of my salary.” John was making Scottsdale Ansers, now highly sought as collectibles.

Toward the end of Karsten’s stewardship, father and son had their difficulties. “If I had an idea and brought it up to my dad, that guaranteed it wouldn’t happen,” says John. “So I had other people bring my ideas to him. And that worked very well.”

According to Solheim and Doug Hawken, Ping’s 55-year-old president and chief operating officer, the company’s low point occurred in 1994. Hawken had just left production to run the company’s marketing efforts. He met immediately with key retailers. “I wanted to find out where we were,” Hawken says. “And we were out of touch.” It was the dose of humility that started Ping’s recovery.

In 1995, when Karsten’s failing health – eventually diagnosed as Parkinson’s Disease – forced him to cede control to John, changes began. Most notably, John started to trust people outside the family to help make decisions. “It was ‘Karsten’s way’ ” before John took over, says Hawken, the highest-ranking officer at Ping who is not a Solheim family member. “Now, it’s a team. It took a different management style to remain competitive.”

After years of resisting change, a new, more activist direction was charted. It certainly wasn’t an overnight transformation, nor has it yielded an unbroken string of market successes. But 10 years later, the results are noteworthy. Among the prominent developments: