I spent several weeks in September talking to people at the bleeding-edge of the new economy and, as I did it, I wondered whether the lessons I was learning could be applied to a more traditional company and I wanted to find one to see if this was true. Eventually an accountant friend of mine said he knew just the company – Willett International. I looked at their website and found that they made printing machines for production lines. Any time you see a sell-by date on a Coke can, a batch number on a pill bottle, or read the label on a parcel from an E-tailer it’s a fair bet that Willett made the machine that printed it. Perfect. I reckoned I knew a thing or two that they didn’t know. I thought ‘here was a lumbering manufacturing business that needed some new economy fizz and ginger.’ How wrong I was. As it turned out, Willett is a shining example of a new old economy company.
I visited their head office in London and their factory in Corby. As I waited in the Corby reception, I was like Sherlock Holmes looking for clues to see what kind of company they were. Like every reception I’ve ever been in, there was a receptionist too busy with answering the phone to do more than nod me in the direction of the signing in book. So far, so predictable. Then there was the large display of the “10 year club”. This had a large group photograph of all the Corby staff that had been with the company more than ten years. It was an impressively large group. I saw a Queen’s Award for Export then an Investors in People sign. On the wall, strangely at knee level, was a letter from Tony Blair congratulating Willett on winning yet another award.
My working theory is that a new economy company has several distinguishing features that enable it to be highly competitive, flexible and fast growing. Primarily, it is about digitising the interface between customers, employees, suppliers and the company. There are also cultural differences such as a calculated commitment to creating, sharing and exploiting commercial knowledge. It also requires an open, relaxed culture with a flat management hierarchy and a strong emotional and financial alignment between staff, managers and owners. There is also an obsession with keeping close to the market. And, underpinning everything, there is a visionary ‘big idea.’ I set to work over two days to see how Willett measured up and what it had to learn from the new economy paradigm and what it had to teach the dot.com whippersnappers.
First of all, I met CEO, Robert Willett, at his London head office. He succeeded to his father’s position several years ago after an impressive business career of his own – first an MBA from Yale and then senior positions at multi-nationals like Unilever. According to their website, the company has over 900 employees and revenues in excess of £74m, but the head office only seemed to have about a dozen people in it. It turned out that the rest of the company was scattered around the world in over 26 countries. Not exactly a virtual company but certainly a highly distributed one.
Digitising the Business
I started off by asking Robert what the impact of technology had been on the company so far and his response was “the death of distance.” The ability to communicate by email, and more recently Intranet, is clearly critical to a multi-national company. He explained that they have just developed a new Intranet system that allows authorised managers to post up to the Intranet items like product manuals, software updates and marketing documents as easily as saving it to a network folder. No knowledge of how the Intranet works is required. This means that everyone can access the Intranet and be sure that they are getting the latest version of whatever document they need.
This is only the first step in digitising the business and Robert believes that the whole project– integrating the whole company and all its functions electronically – will take three or four years. Apart from their work on the Intranet, they are focusing at the moment on the financial planning side and I took this up with Andrea Davis, Willett’s Chief Financial Officer and she gave three examples of how technology was improving the efficiency of their internal systems. First, she explained that, thanks to the new systems, they can roll-up their monthly management accounts in less than a week, whereas it used to take a month. Second, they are also in the process of installing budgeting and working capital planning software worldwide to manage that aspect of the business in real time. The third example is the way pricing has changed. Prices used to be distributed by fax which was somewhat haphazard, but now all the pricing information is on the Intranet they can be updated very quickly and people have one place to go to get the latest information (instead of searching through their in-tray for the latest fax or email). Digitising their business processes is steadily improving the speed of decision making, the quality of the information available to managers and giving them sharper cash management tools.
Andrea said that they were also looking at digitising their supply chain. To try to introduce a new way of thinking, she now asks for an online quote option for all purchase requests as an alternative to the usual supplier. Andrea said that she came across another good example when she was chatting to someone from purchasing at one of their regional offices and found they did their stationery orders online and that they no longer kept any stationery in stock – it was all ordered as needed. I remember at IG that we had a stationery cupboard that would have done Ryman’s proud so I thought this was a great idea.
Although they have a good corporate presence web site (at www.willett.com) they are struggling to get an e-commerce site set up. In theory it ought to be easy to allow customers to buy hardware and, especially, consumables like ink over the Internet. The main problem is how to handle distribution. They have been centralising their operations into a number of regional centres, for example the European HQ is in Germany, and these can serve as distribution and service hubs. Robert expressed his ambition to “get preferred customers to interact on the Internet and Amazon-ise the sales process.” This will allow the company to focus on wrapping each machine with highly profitable maintenance, consumables, consulting and software integration and, over time, turning the sales force into a marketing force. Andrea summed up their strategy as follows: “putting E- in front of any process doesn’t make it any better – you have to focus on the customer and make sure you deliver to their needs. Digitisation provides an additional channel for customer interaction. Don’t close off the old channels. Instead, give the customers an incentive to change.”
Culture and management
I wanted to see how Willett managed its staff and what kind of culture it had developed so I talked to Martin Gillam, Group Personnel Director, during a tour of the factory and over a sandwich lunch in their meeting room. Since I have had no personal experience of a manufacturing business, I suppose I was expecting a 90’s version of “I’m Alright Jack.” Again, my preconceptions were way off the mark. In the first instance, Willett pays enormous attention to what the staff have to say and to sharing company information with them. Since joining the company, Martin has “busted a gut to improve communications.”
A good example of this is their quarterly staff survey. I tried this at the software company I used to run but we rarely got more than a 50% return rate. Martin explained that Willett gives half an hour off work to complete the survey and gets an almost 100% response rate. More importantly, the results of the survey are made public as quickly as possible and then followed up in more smaller, more interactive focus groups. I read the results of the last survey and it made interesting reading. Like most people they don’t feel overpaid, over-consulted, or over-recognised but they do feel loyalty, commitment and a willingness to change. However, there is a difference between satisfaction – which in a factory is more likely to be linked to people’s feelings of job security and pay levels – and commitment to the company, which is very high.
I also talked to Martin about the Investors in People project. He said that he “we didn’t do it to get the laurel wreath but in order to get better practices in place and raise the profile of the Personnel Department within the company.” My experience is that it is no mean feat to get one of these awards and it says a lot about a company that it has taken the effort to invest in staff development. There is a difference between saying it and doing it.
Alignment Between Staff, Managers and Owners
A key element in the new economy is a strong alignment of interests between staff, managers and owners and I wanted to explore this. I asked about stock options because this was so common in the dot.com world and I wondered how a family-owned business could compete. Willett does offer a stock option scheme and has created a kind of internal market for its shares that allows people to cash them in at a price determined by balance sheet value. I think this shows that this form of incentive is, in reality, available to any kind of company.
For a more established business the process of digitisation requires dramatic changes and change is a scary process for the people going through it. A dot.com start-up can build a business up from scratch and doesn’t have to deal with this (at least until it too has to evolve). When I asked Robert Willett about this, he said that people’s first reaction to their plans is typically anxiety and concern turning slowly to excitement about the future. However, he is “committed to working it through with the staff” rather than despite them. I saw some evidence of this intent when I met the manager in charge of their Intranet. He had been with the company for twenty years – predating the Internet by more than a decade! This ability to adapt and cope with the stresses that change produces is something that the new economy will have to learn as it matures.
Another area in which Willett differs from the typical dot.com is that it is a family-run and family-owned business. This has a strong, and mostly positive, influence on the culture. Its one drawback is that it does not have a roadmap of the future as clear as the venture capital-to-floatation route for most new start-ups. This means the Willet has to work hard to exploit its inherent advantages. First amongst these is that people like working for a family business. Patient capital can give stability and the long view. This has meant that the company has been able to retain key staff on a very long-term basis. It also helps that the staff can see that the boss obviously loves running the business. He and his team have a visible motivation that everyone can understand. It also means that shareholders – effectively the owner-managers – have a profound understanding of the business and so it has more latitude for making decisions that involve short-term pain but long-term rewards such as investing in speculative R&D. In a sense, dot.com start-ups get to do this, but only gets to do it once and as soon as the initial investment is used up it has to run on its profits like every other business, but with the financial market or venture capital company breathing down its neck.
Keeping close to the market
Willett spent £2.7m on research and development (R&D) in1998 with over 80 people worldwide in the R&D role. This effort is clearly aimed at better meeting customers’ needs. Although much of the work goes into hardware products, because of my software development background, I was most interested in this aspect of their work and how they were using this to address the needs of their customers. I talked to Dave Wallace, Willett’s Software Services Director, about how they developed software. He explained that they have two marketing people based in Corby alongside the main software development team. This ensures that the next generation of software that Willett develops is done with direct input from people who know what customers need. As well as this kind of planned, centralised R&D function in the UK, Russia and the US; regional offices are able to ‘kick the ball into the goal while the refs not looking.’ A good example of this kind of initiative was the Norway office’s development of a machine that strapped large, EU-approved, labels on to palettes (previously a difficult task, apparently). This response to a local customer requirement is now part of Willett’s global product line-up.
Product tampering scares like the Tylenol poisoning in the US during the 80’s or the Coca Cola contamination in Belgium more recently gave the initial impetus to Willett because companies wanted to be able to label each product with a date and batch number. More recently, large retail organisations like Wal-Mart or Sainsbury’s have begun to request certain levels of labelling standards and this has meant that suppliers have had to respond by labelling products that previously weren’t labelled. Much more recently, two trends have driven Willett’s business forward. The first is the e-commerce market which requires very smart warehouse management and product labelling in order to ensure that the right goods go to the right customers – not by the pallet load as before but in ones and twos. The other trend has been the integration of business functions using computers and networks, particularly enterprise resource management tools like SAP. In this brave new world a manager can track throughput on production lines around the world by connecting to label printers and scanners using their normal planning software and even reprogram prices label codes on the fly in real time. In a world of mass customisation, the ability to label, identify and track any item – even as small and mundane as a can of soda pop – is going to become increasingly important. Equally being able to sweat small margins of increased productivity out of existing assets or being able to micro-manage inventory has an obvious value. This is part of Willett’s vision of the future.
Several people I had met talked about their vision that Willett would become the “Microsoft of the shop floor.” I wanted to find out what this meant. Dave Wallace, Software Services Director, explained that each element on the factory had to have a degree of independence intelligence and the ability to communicate. Willett wants to make machines that think and put them at the interface between atoms (material goods on the production line) and bits (software and databases inside the organisation’s IT infrastructure). Wallace’s team is busily creating the software that will enable this connection between the production line and a company’s business information systems. They plan a modular toolkit that can be used to create bespoke solutions or turnkey systems “that do exactly what they say on the tin.” It will be a Swiss Army Chainsaw. At the moment they are focusing on integrating the Internet protocol into their products and building middleware that will link them to SAP corporate resource management systems (and their ilk). Once I got my head round the concept – and remember that I have had very little to do with manufacturing in my career! – it struck me as a very powerful concept – or as Wallace put it “a case of the bleeding obvious”. The biggest difficulties, according to Wallace are first “encapsulating the whole concept in a brochure” that a salesman can use to actually sell it to a customer. After all, Microsoft’s success is not technological but in marketing. Second, they must overcome the technology gap between what can be done and what the market is capable of absorbing. In other words, it is the difficulty of productionising a dream.
Robert Willett summed it all up for me. He said that they were operating based on a vision of the company in five years. This let’s them make bold decisions rather than fiddling around trying to over-refine existing business practices. It seems to me that, as a business, Willett combines the long view of the old economy with the drive and vision of the new. Although their work is not glamorous as the majority of dot.com start-ups, it is vastly more useful. Having expected the worst, I find that Willett are already applying the best practices of the new economy and have a few lessons of their own to give back.