Watch out IKEA (or maybe not...)

So often do these programmes start with a family-owned business making a loss, yet having aspirations of grandeur. Obstinate founders still at the helm whose lack of communication with their workforce jeopardises morale. They understand change is needed, but frequently lack the ingenuity to undertake it & expect it to be done for them.

Perhaps I have my own biases from watching similar programmes, but episode 1 of Lord Digby Jones’ new troubleshooter was no different. Hereford Furniture are a family-owned business manufacturing wooden furniture, supplementing this with imports from China and retailing these goods in 3 outlets – a jack of all trades but master of none. Mike Muxworthy, the 59 year-old co-director, founded the business and intended for his company to be a household name when he retires – not likely if it continues in the loss-making manner it’s currently run. This is why Digby was brought in, to try to transform the mindset and company itself.

I spy with my little eye, someone who doesn't like budgeting

15,000 Variations

I certainly do not claim to be a business expert but having 15,000 variations of the furniture you manufacture does seem rather excessive. Mike himself seemed rather embarrassed by it, in that he quickly shot the claim down to 2,000 variations. This would imply to me that he understands where a source of the problem is, yet hasn’t made a strategic decision. By focusing on a smaller core product range, the company can maintain a steady inventory instead of the made to order system which impacted working capital (and ultimately lead times).

Revenue Decline

While the demise of some customers cannot be predicted, another factor Mike blamed for the declining revenue was an influx of Chinese imports into the UK market. Forgive me if I am wrong, but aren’t Hereford Furniture also importing Chinese goods into the market (albeit probably better quality)?

Q: How do you differentiate yourself in a market flooded with Chinese imports?

A: You definitely don’t import similar goods yourself

There seemed to be a lack of focus on who the target audience was and what they wanted in furniture. In a competitive industry with a customer-base who like to express themselves through the products they buy, the mundane coloured products and lack of brand identity left the company without a personality. My interpretation of this situation would be to differentiate yourself through a brand of Britishness – and dump the Chinese imports to ensure brand continuity. Brands have the potential to add real value and this British branding may facilitate the achievement of Mike’s goal of becoming a household name.

Brand

Q: If Mike had this goal, why has a brand not been created and developed before I hear you ask?

A: It amounts to a lack of bravery to take action and deviate from the status quo, despite making a loss.

Previously, the majority of goods were sold to independent retailers and because of this they were sold without a brand imprinted on them. There was a fear independent retailers would no longer stock their goods if they were branded. The lack of business awareness to produce branded goods and non-branded goods to sell to differing customers is worrying and it took Digby Jones’ intervention to give him the confidence to do so. One thing I disagree with Digby Jones on is the acceptability of a Norweign name on brand focusing on British manufactured goods. While I confess it may well get people talking about the brand because of the intrigue of the Hygge meaning, for me the Norweign branding and British goods is something that adds confusion for a strong and clear brand.

Poor Organisation

We’ve all heard the old adage “Communication is key”. Well, a lack-of is therefore detrimental to a company’s success and longevity.

It was a rather toxic atmosphere on the factory floor with blame being passed among the team siloed factory floor workers for hold-ups in production. There was a clear disconnect between Mike in his office and the factory floor, with communication lacking both ways. I think it is rather pertinent that the first thing Lord Jones did was to speak to those people on the factory floor. To become more efficient, those carrying out the operation need to be involved in the decision making process, they understand the intricacies of the job. The lack of communication or governance structure to allow those employees a say in becoming more efficient in how to carry out their own jobs, resulted in low staff morale and little autonomy. By having a respected mechanism in place whereby anyone can make suggestions to the way things operate, employees will feel more appreciated. This intrinsic motivation may result in a more engaged and efficient workforce in itself.

Summary

I understand it is difficult to take a step back and objectively analyse your company (although if Mike took the financial planning side of the business a bit more seriously, it may be easier!), especially considering the length of time he worked there, but there is little excuse for not listening to colleagues.

While there were drastic changes in the number of variations offered, team morale through an ‘away day’ and branding, there is still significant work to be undertaken in order to realise the potential of the workforce and company. It would have been nice to see the progress (or lack of) in the future, to see if Mike’s obstinacy was still preventing further business development from happening.

Have you watched this episode? – Do you agree with my hard-line stance on Mike?

Let me know your thoughts below