HIGH POINT — As part of the 2020 Furniture Today Leadership Conference, CEOs from three of the most well-known and respected brands in the industry shared their thoughts on what reinvention has meant to their companies, and what it means moving forward.
Todd Wanek, president and CEO of Ashley Furniture Inds; Farooq Kathwari, chairman, president and CEO at Ethan Allen; and Kurt Darrow, chairman, president and CEO of La-Z-Boy Inc., spoke with Furniture Today Editor in Chief Bill McLoughlin in the virtual discussion.
How business evolves
Wanek spoke of how Ashley has embraced the idea of reinventing its business model continuously and “challenge ideas of how we do business.” Part of that process, he said, includes getting leaders to think about how the business will continue to evolve and how will technology be part of that evolution.
Using data to better understand the customer, he noted, is one of the biggest challenges — and opportunities — he sees for the industry moving forward.
“I think one of the biggest concerns we should have as an industry is around customer data and what the customer’s propensity to buy is,” he said. “Plus, there is also this need to create experiences around what the customer wants and needs and understanding their buying trends and buying habits and turning that into your business model.”
He also noted that manufacturing continues to evolve, with robotics, automation and use of other technologies being among the most important changes taking place on the production side of the business today. Examples of this range from driverless vehicles and forklifts to 3D printing.
Automation in particular, he noted will take some of the labor-intensive tasks off workers, which will free them up for other responsibilities at the manufacturing level.
“We are not going to have dark factories necessarily, but we are going to have people assisting with automation and robotics and taking the hard labor of lifting thousands of pounds over the course of the day out of the job,” he said, noting that automation also will likely impact simpler task such as putting screws in various components. “So evolutions are fast and furious in manufacturing. It is probably easier to do in manufacturing and distribution centers than it is retail stores, but it is still going to have to be done.”
He said cited several examples over the years in which Ashley has evolved, including the 1982 moment where his father, company founder and Chairman Ron Wanek, attended the Dallas market only to find a company that was producing veneer tables overseas not only cheaper but also of better quality that the occasional tables being produced in Wisconsin.
“He knew at that point in time we had a problem,” Wanek said. “I would say that was the beginning of the making of our culture and organization. … Don’t be afraid of change, embrace change. We just indoctrinated that into our business.”
Maintaining the vision
Kathwari spoke of the change Ethan Allen has undergone over the years including the establishment of Ethan Allen galleries in the 1940s and ’50s to changes the company made adapting to globalization including the decision to maintain much of its U.S. manufacturing presence while sourcing certain items, including some wood furniture.
While Kathwari acknowledges that businesses must continue to change and evolve, he has maintained certain principals are important to move the business forward.
“Twenty-five to 30 years back, I said you must establish a certain leadership vision under which we should operate,” he said. “The overall umbrella was, which I am glad is part of this (leadership) convention, we said we are going to be entrepreneurial and disciplined.”
He then went on to instill in the leadership team several key principals that have been part of the enterprise from that point on, helping it navigate through and adapt to change in the years ahead.
“The main job of a leader, whether you are in a business, or whether you are in government or are the head of a state … is to help their people become better,” he said. “It is simple, but it is often not implemented.”
He said that leaders also have to work hard and be accessible, while also creating a culture of speed.
“It is like the Marines,” he said. “If you are 70% ready, do it. Because if you are waiting to be 100% ready, you will never do it.”
Other principals he tried to instill in the organization include prioritization of goals and treating people fairly.
But he said as the company has evolved, it has tried to create a balance between the creative and business aspects of the organization. This, he noted, was especially important when some 25 years back a number of its independent retailers were retiring and the company needed to replace them with creative minds that could also become entrepreneurs with a business sense — and savvy — necessary to run the stores.
“You have to have the two elements: You have to have the right side and the left side,” he said, noting that some 90% of its 200 or so leaders in its retail stores have an interior design background. “You have to be creative, and you have to be disciplined as a business person. When you combine those two together — and it is not easy — then we have an opportunity of operating.”
Quality of the team
Darrow spoke of several reinventions that have taken place at La-Z-Boy since 2003, when he became CEO. The first was dealing with acquisitions — including case goods manufacturing — that didn’t fit with the company or the times, as most wood furniture had moved or was moving fast to Asia.
“We were so immersed in trying to make this portfolio of companies work,” he said. “And it wasn’t going to work. We were uncompetitive in the new norm.
“Also when I inherited the company back then, we had $250 million in debt and about $35 million in cash, and so selling some of these companies … clearly was something we had to do, which was extremely difficult for me personally because I had grown up on the sales and marketing side of the business, and we grew year after year. The first thing I had to do as CEO was to shrink the company in order to survive. That was tough.”
In retrospect, Darrow said, he probably delayed by a year the call to implement various changes as he wanted to make sure that selling or closing the companies was the right thing to do.
When it came time to make the tough decisions, he recalled “a board member asking me, when I said we are going to have to take some write down and do some other things, ‘We are going to have to admit we made a mistake?’ I said ‘We are not going to have to admit it, it will show up every 90 days when we report our financial performance.’”
Darrow said one of the lessons learned from the time was that “bigger is not always better,” which has led the company to avoid making acquisitions for the sake of making acquisitions in the past 15 years.
He said the company also has reinvented itself by growing its retail segment, building a new headquarters and acquiring Joybird in late 2018 as part of an effort to reach younger consumers.
But he said the greatest reinvention the company has made in the past decade has to do with the quality of the team it has built.
“It’s a combination of industry people, a combination of outside people with fresh eyes and fresh ideas and a team that is very collaborative,” he said. “And it’s probably much younger than a lot of the senior teams at some of the companies in our industry, and that is a big part of our success.”