“And then we watch the factory dance”

“And then we watch the factory dance”We recently finished a meeting of the Developing Market 100 in Dubai and had more than 20 attendees from Africa, East Europe, India and the Middle East. As we often do, we used the beginning of the meeting to work with founders on articulating their original insurgent mission. Our view is that most great companies start out as insurgents at war with their industry on behalf of new or underserved customers. Constantly reinforcing that mission is essential to retaining your Founder’s Mentality®.

During the session, I had the great pleasure of spending time with Ajay Arora, managing director of D’Decor Home Fabrics, an India-based leader in curtain and upholstery textiles. His description of D’Decor’s insurgent mission and the capabilities required to support it was one of the most inspirational I’ve heard. It also included what immediately became one of my top five favorite founder phrases: “And then we watch the factory dance.”

As Arora explained it, his company faced a fundamental strategic question from the very beginning: “Either we serve our customers’ needs and figure out how to manage the complexity this creates, or we keep things simple and under-serve our customers.” Those customers needed a wide variety of fabric designs to sell but were loathe to take on the extra cost variety creates. So D’Decor assumed the burden of managing that complexity for them and put this challenge at the center of its insurgent mission. Arora put it this way: “To meet the complex demands of home furnishing businesses by manufacturing fabrics to order, such that they can offer their [own] customers a complete range of the latest designs, while keeping their inventory costs to a minimum.”

Delivering on this promise required D’Decor to do a few things incredibly well:

  • First, as good anticipation is essential to reducing complexity, the company needed great people who understood the world of fashion and could anticipate trends. “We don’t need to be trendsetters,” Arora said, “but we need to anticipate what our core B2B customers will be needing and prepare.”
  • Second, the company needed close relationships with its customers and superior systems tying them to its factories. When a homeowner or designer places an order through one of D’Decor’s B2B customers, that must generate a matching order at one of D’Decor’s factories. That way the company can deliver on time and in full as well as replenish inventories as necessary. “We were promising our customers that they didn’t need to carry inventory—we would supply them on time,” Arora said. “This required us to create a virtual integration of our systems.”
  • Third, D’Decor needed a state-of-the-art manufacturing process that could be world class at managing the complexity of “made to order” over the widest set of offerings. This required investment in a set of advanced manufacturing plants and warehouses capable of serving D’Decor’s global markets. Now that the latest machinery and IT systems are in place, however, complexity has been replaced by tight choreography. “We watch the orders come in,” Arora said, “and then we watch the factory dance.”

This is a fantastic story. D’Decor, with the tagline “Live Beautiful,” has grown 20% a year for the past five years and is now a world leader, commanding at least a 25% share of the Indian market. It is also a great example of a company making complexity work to its advantage. Much of our work on the Founder’s Mentality focuses on avoiding complexity altogether. But we need to be clear that not all complexity is bad. Creating complex customer offerings that serve diverse needs is a good thing if your customers are willing to pay for it. Devising world-class ways to manage complexity better than the competition creates barriers to entry. We talk often about the importance of great stories in shaping great cultures or reinforcing core ideas. Here’s one to add to your library.

This entry was posted in Frontline obsession by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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