Best Managed Companies

AG Hair: Canada’s Best Managed Companies 2017

Canada’s Best Managed Companies

AG Hair’s story starts in a basement, like so many other entrepreneurial origin tales. In 1989, Lotte and John Davis, a married couple from Burnaby, B.C., used a $5,000 loan to start producing shampoos and conditioners. They operated a machine designed to make peanut butter to fill the bottles and sold the finished product to salons.

Today, they have two facilities for the manufacturing, warehousing and distribution of more than 65 hair-care products. An 85-person team sells the bottles to more than 14,000 salons and stores worldwide. Next year, AG will merge the facilities into a single 70,000-square-foot space that will allow it to keep up with demand.

In a crowded landscape dominated by multinational giants like L’Oréal, this small company is more than holding its own, enjoying triple the industry standard annual growth rate over the past five years—without adding to the head count.

AG Hair product assembly line

AG Hair’s products on the assembly line. (Grant Harder)

The owners’ strength lies in their ability to capitalize on trends before they happen. In the ’90s, when natural beauty products were still the exclusive domain of hippies, the Davises were already swapping out parabens for healthier alternatives. That’s an advantage today, when every consumer’s eyes glow at the mention of seaweed extract and fair-trade argan oil. “We spend a lot of time going to runways and reading editorials to understand what the hair-care trends are going to be,” says Lotte.

Last year, AG Hair took another gamble and launched a collection of texturizing products aimed at people who prefer the effortless “I woke up like this” look. It was a smart bet; after less than year, the line makes up 11% of the company’s total revenues.

Being nimble isn’t just about keeping pace with the changing trends, says CEO Graham Fraser. Three years ago, the company implemented a “strategic playbook,” encouraging employees to think like entrepreneurs and make decisions to improve efficiency. Workers set their own goals and actions, keep track of their progress with scorecards and attend weekly accountability meetings. It allows them to speak up about things they think are bogging down the company. For example, equipment operators noted it was tedious to walk to four different panels to run a couple of batch tanks. One integrated control panel was soon installed.

Employees have pushed for a faster labelling system and better industrial mixers, and have also given the packaging a makeover. Since everyone began putting on their entrepreneurial hats, AG Hair has met its annual financial goals without fail. Says John: “Everyone treats the business like it’s their own.”