Tuesday, June 15, 2010

In the flooring industry it pays to have a vision

"You cannot become what you want to be by remaining what you are." This quote by Max DePree from his book, Leadership is An Art, sums up the idea that a business needs to embrace change in order to become what it wants to be. Most companies know what levels of performance they would like to achieve but too few do anything to make it happen; supporting this oft quoted management axiom:
Some companies make things happen. Some companies see things happen. Some companies wonder that things happen.

Change happens whether you are ready or not.

These are challenging times in the flooring industry and since I became involved in 1990 the one thing that has been consistent each year is CHANGE. Just look how fast things have changed in the six months since I wrote about the contentious relationship between manufacturers, distributors and retailers. Already in 2010 we have events that could exacerbate that situation:

•    Armstrong Industries is beginning to service CCA Global retailers direct and is using their distributors as a logistics providers. (National Floor Trends)

•    Mannington terminated their agreement with Abbey Carpet Co. (Floor Covering Weekly)

•    Anderson Hardwoods decided to stop exhibiting at Surfaces and join Shaw’s regional shows, causing their existing distributors to share access to retailers with their parent company and Shaw’s direct sales force,  albeit with different branding options.   (Floor Covering News

•    Shaw Industries acquired Stuart Flooring strengthening their position as a player in the hardwood flooring segment, (Floorbiz) and partnered with LG Hausys enabling Shaw to enter the vinyl flooring segment.  (Floor Daily)

•    The “Bravo” group of Armstrong distributors aligned with Interface to promote the sale of carpet tiles to mainstreet through retail specialty stores. (Floorbiz)

•    BR111 created a website that will sell the consumers directly with plans for rebates to go to the channel partners who lost the sale.  (Floor Daily)

And let's not forget that seven months ago the U.S. dollar was 1-34 against the Euro whereas today it is at 1-19, making US exports around 12% more expensive and therefore less attractive.


The Vision Statement: Creating a vision that embraces change.
With the continuous changes in our industry you need to have a VISION of what you want to achieve and a route map of how you might achieve it. Remember the DePree quote: “You cannot become what you want to be by remaining what you are.”  A vision statement is not cast stone and needs refining at regular intervals. Creating a vision of where you want your company to be in five years is a good place to start and here is how I suggest it can be done.

Form a small group of senior employees representing sales, marketing, operations and finance and give them the task of creating “VISION 2015.” Ask them to have the presentation ready by October 1, 2010. Have the group do the following:

•     Create a situational analysis of where the industry is today and the dynamics driving it, including:
    • Products
    • Market segments
    • Channels to market
    • Supply chain
    • Economic trends
•    Create an overview of the competitive landscape affecting your business including key players who influence your ability to compete in the marketplace.

•    Create a broad strategy to grow your business considering these and other options:
    • Increase sales
    • Strategic alliances
    • Acquisitions
    • New products
    • New channels to market
    • Reduced operating costs
    • Streamline administrative processes
    • Using the Internet
    • Embracing Social media
•    Examine the key resources needed to implement the strategy such as:
    • Human resources
    • Investments and finance
    • Technology enhancements
•    Translate the strategy into an annual P and L for the period of the vision.

The completed project can be summarized in a power point presentation of only a dozen slides and presented to various internal groups for comments to receive input and further refinement. You will be amazed at how much you learn about your company (as well as your management) as a result of this process including some things you probably did not want to know. And you’ll have a blueprint that will help you navigate challenges that lie ahead.

When complete, I believe it is an excellent idea to present this to your entire workforce, in groups if necessary and with or without profit numbers at your discretion. Employees are always motivated to know the company has a plan for the future. It is also a good idea to present regular updates as to how the plan is working (or is not) so that "VISION 2015" becomes a buzz phrase in the company and employees feel they are part of the process.

Remember the line from William Ernest Henley's poem, Invictus: “I am the master of my fate . . ."

Visions statements are crucial and the process is fascinating. If you need my help let me know; and as always, if you have thanks for reading this.

David
David Wootton is President of The Wootton Group, an independent flooring consultancy, and a member of the Floor Covering Institute. He is past CEO of both Columbia Flooring and Harris-Tarkett.

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