When DT published the news last week that Phil & Teds was buying its bankrupt competitor Mountain Buggy in an all-New Zealand deal, I came off sounding too harsh about Phil & Teds owner/CEO Campbell Gower's earlier gloating about MB's problems and the unannounced-but-inevitable plans to move MB production to China. Or so I've been told in various emails from extremely devoted P&T owners and people who know and like Gower.
And they're probably right, to a degree, so after a reflective weekend away from the Kiwi stroller market, I decided to revisit the issue, call myself a dick for calling Gower a dick, and point out the combination of real accomplishments and positive qualities and things I like about P&T and MB, both. I didn't want to give the wrong impression that I didn't recognize the whole host of things P&T have done right, and the list goes well beyond their core, innovative stroller design that's so popular with city families.
It's not like P&T is some giant industrial conglomerate who is destroying Mountain Buggy's artistic integrity by gobbling them up. Mountain Buggies are fantastic, and people who have them like them, but that doesn't change the business fact that it's economically unsustainable to import all the parts and materials for a stroller to New Zealand, assemble it, and then ship it out to the rest of the world at a competitive price. And it doesn't change the fact that MB made plenty of business mistakes and had plenty of, for lack of a better term, fashion disasters, as it tried to gussy up its utilitarian strollers. Then there's the global economic implosion. Mustn't forget that.
So the MB acquisition was a thoroughly legitimate move on P&T's part, and it's probably the only way MB would stay alive as a brand, if not as a NZ factory. And as for Gower, you know what, he's earned the right to talk a little smack, considering the consistent growth and success P&T has seen. And if he wants to give all his employees quirky job titles [CFO=Dollars & Cents, etc.] and build an irreverent brand that's more Ben & Jerry's than Steve & Jobs, that's fine too. Lord knows, working in the sickening cuddly cutesiness of the baby industry would drive any normal person insane in about five minutes; so you do what ya gotta do.
I figured I'd just light an aromatic candle, curl up with my laptop, and watch all twelve of the video clips produced by NZ One TV, which show Gower and his employees talking about the secrets to P&T's business success. Then I'd post some of the Wisdom from the Eddie Van Halen of double strollers. I'd linked to one of the transcripts last week, when I did the quick, back-of-the-envelope look at P&T's numbers, so I pulled up that post, and clicked.
And lo and behold, the entire series--videos, transcripts, photos, and all--had been completely scrubbed from the New Zealand Trade & Enterprise agency's website.
Frankly, it's not interesting, much less important, whether a single innocuous quote and link on a blog 3/4 of the way around the world triggered a "bury it!" fire drill on the NZTE's website. Maybe there's some other obvious reason NZTE suddenly deleted its hagiographic profile of one of the country's highest profile success stories. But I also doubt that anyone from NZTE reads Daddy Types, and I know that Gower and his people do. So I will assume that he got on the phone--or had his VP of Negotiating & Suing call--and told NZTE to delete the record of quotes he made on national television that, for whatever reason, he didn't want anyone to read anymore.
Which, if it's the case, seems as indicative as anything of Gower's temperament. Maybe he's not a dick, but he wants to control things that are beyond his control, and he calls up government agencies and tells them what to do. I would expect nothing different from a banker-turned-CEO/owner of a $300 million company he built, and that's fine.
But just as I really have no beef with P&T and Gower, I also have no need or interest to suck up to him. I, too, escaped banking and startups and can do pretty much what I please. I assume that if Gower thinks about me or Daddy Types at all, it's only as an irritant who complicates his company's attempts to control its message.
[It's not just this single datapoint; after DT published photos from the 2006 ABC Kids Expo of the Phil & Teds GT, a deluxe-looking aluminum stroller that never went into production, I heard blowback that now they were having to field all these customer inquiries about when it would be released; and then at later ABC's, the company began banning bloggers from taking any photos at all. And I heard similar grumblings last year when DT broke the not-a-recall of the first batch of Dashes.]
So after the jump, I've rescued all the NZTE transcripts of Phil & Teds' New Zealand TV series from the Summer of 2007. Turns out they were cached on Google. It sounds like a great, successful company with great products, a fun culture and a lot of ambition! I can't wait for the ABC Kids Expo this fall when I can meet P&T's Chief Cook & Bottle Washer in person!
phil&teds Most Excellent Buggy CompanyBeginning in July 2007, the NZ government-owned station TV One aired a series of twelve brief interviews with Gower and other Phil&Teds executives for under the title, "Business is Booming." Coincidentally or not, the pages and videos were entirely scrubbed from the NZTE's site soon after I linked to them. They're all still in Google cache, though, and they're compiled below, with some notes and commentary, just in case.
phil&teds Most Excellent Buggy Company Ltd, a firm that prides itself on being quirky and somewhat irreverent and where product design is critical, grew exports by 173 per cent last year to $17.2 million.
Located in Wellington, phil&teds designs and markets innovative and world-leading nursery hardware products, including baby buggies, travel cots, car seats and highchairs; products that Managing Director Campbell Gower says help customers adapt and survive the conflicting demands of parenthood.
Mr Gower took over phil&teds in 1998 when the business was in danger of foundering. As he readily admits, he knew about finance but knew, quote, "bugger all" about engineering, design, marketing, exporting or pricing! The next few years were a massive learning curve as, with the help of staff, he transformed the business into a financial success and phil&teds into an international brand with attitude.
"Apart from the name, the business is not anywhere close to what it was when it started out of a garage in Wellington."
He retained the name because it is vital in creating all important cut-through in an intensely competitive market. "Our brand never fails to make people smile. It's a bit of fun, it's quirky, and it's innovative in an industry where so much is the same."
Today phil&teds' core products are well established as niche leaders in the expanding and very large global nursery product industry. About 95 per cent of sales are generated from exports to 25 countries, with key markets the UK/Europe, Australia and the USA. The company works through distributors as well as selling direct to retail customers.
Mr Gower says phil&teds has a deliberate strategy of sequentially entering new geographic markets when consumers in that market have moved past the 'early adopter' stage for purchases of 3-wheeled buggies (like its flagship product the e3), and there is at least one competitor already present in the market.
"While this strategy may mean that we lose some early sales in those markets we are entering at a time when we know it's closer to a "tipping point" of sales, avoiding the risk of incurring high upfront marketing and advertising expense in a market that may be too early in its acceptance of the 3-wheeled buggy concept."
The company uses online shopping to 'seed' product in new markets, an excellent way to get mothers seeing and talking about the product before the company's present in the market. Product is gifted to celebrities and opinion leaders for similar reasons.
Sales are driven from New Zealand, with staff continually travelling to export markets; something which helps break down barriers retailers may have about dealing with a supplier from the other side of the globe.
Mr Gower says phil&teds competes on quality, not price, choosing retailers that support this positioning. Its world leading and differentiated product designs are a critical success factor and are created by a small in-house design team. Its strongest products all have unique selling points.
"Our travel cot is the only one in the world that's lighter than the baby and we have the lightest, smallest folding clip-on highchair in the world. Our e3 buggy 'adapts' to take two kids; it's unique in the world and a market leader, given most western families have two children within three years of each other.
"We are very good at listening to customers, distilling their need and creating a design solution and marketing that back into the channel in short speed-to-market timeframes. More than 80 per cent of sales are from products we've created in the past three years, so the range is always new and fresh."
Manufacturing is kept low-cost by being outsourced to Chinese suppliers where phil&teds is 100 per cent of their production. There's a big emphasis on quality control, which is critical as product is shipped directly from China to market.
Mr Gower says phil&teds would be nothing without its 22 staff, who all live and breathe the brand values. The company culture is not to take itself too seriously, but while it actively downplays corporate formality, it is very serious about what it does.
Staff are encouraged to grow and develop with the business. For example two years ago a staff member with a background in apparel design was given the resources to start a new business division, mokopuna merino™, a merino clothing brand for newborn to two years. It's now being exported to the UK, with more markets under development.
Recently Mr Gower gave management the opportunity to buy into phil&teds and also sold shares to a private equity fund.
He's justifiably pleased that the company has not only survived its inauspicious start, but thrived, with 80-100 per cent growth in annual sales expected to continue into the foreseeable future.
"Risk taking and confidence are enormously important in exporting. You've just got to give it a go; you can learn as you go. If we can do it anyone can."
Image: phil&teds staff engaged in buggy design.
Old URL: www.nzte.govt.nz/section/14606/16247.aspx
Part 1 -- the Phil & Teds story:Gower had me at, "I'm an escaped investment banker":
HOST: It's the sports car of strollers. The must-have for upwardly mobile toddlers. Phil and Ted's Most Excellent Buggy Company has taken the world by storm. This Wellington-based firm has transformed itself from a struggling engineering company to an export juggernaut. Campbell Gower took over the company in 1998. Back then, sales were around $250,000 a year. Today, the company has export sales of around $30 million. Campbell, everyone wants to know, how did you do it. What was the secret?Part 2 -- the Better by Design design audit: Gower talks about rejecting the NZTE's recommendation that the company change its name to something less "adolescent" and more New Zealand-y:
CAMPBELL GOWER: (PHIL & TED'S CHIEF COOK AND BOTTLE WASHER): Well, the secret is that there's actually no secret. Um, we tried a whole lot of stuff and we did less the things that didn't work and did more of the things that did work.
HOST: So, why this particular business. Were you passionate about baby products?
GOWER: Well, not really. But, um, I'm an escaped investment banker, so, you spend all your life in that world, ah, often consulting, and, ah, you figure you know a lot more than the people you consult with. So, I thought, well, I, I may as well give this a go.
GOWER: Ah, there was a Phil and the was a Ted originally, and, ah, I bought the company from them, and, ah, then proceeded to learn that actually, the reason I was consulting is I didn't know anything about what I was doing. So, all the things we needed to know about, like engineering and marketing and importing and exporting, quickly realised we didn't know anything about. But, you know, you, ah, you start somewhere.
HOST: Was exporting always part of the master plan?
GOWER: Um, I realised from the outset that we did need to export because the New Zealand market is actually very small. But the business was never going to be large enough in New Zealand, um, to sustain our aspirations, and, nor do we think that it was actually fair that the people that, you know, they should be limited to seeing those products sold in NZ. So, it's about trying to find the right stage for, for people's ideas. And, also, you know, for the business itself.
HOST: How did you set about convincing big stores on the other side of the world to stock Phil and Ted's.
GOWER: You know, we, um, decided that we were the best representatives of our product, so, we to see foreign shops internationally. We'd choose a market where we thought it had the right dynamics for our products. Ah, we, we'd, ah, find the retailers online. We'd ask them a few questions. We'd make an appointment. We'd go and see them. The most successful market entries we've had, ah, internationally have been where we've actually set up the market ourselves, and, subsequently, appointed a distributor to take that over.
HOST: So, lots of face to face.
GOWER: There's no substitute for, you know, flying to a place, getting a rental car, ah, sorting out some motels and going visiting stores. Pretty much every day, there's somebody from Phil and Ted's somewhere in the world, and we're seeing suppliers or we're seeing customers or doing something. Well, hopefully they're doing something.
HOST: Campbell, thanks very much for having us. Great to hear your story and we can wait to come back and check more of your stuff out.
PRESENTER: We're back at Phil & Ted's baby buggy company in Wellington to find out more about their extraordinary export success. Hi again, Campbell. I know you are involved with New Zealand Trade and Enterprise through the Better by Design programme, and specifically the design audit. Can you tell us what impact did that have on Phil & Ted's?Part 3 -- Dealing with the strength of the NZ dollar:
CAMPBELL GOWER (CHIEF COOK/BOTTLE WASHER FOR PHIL & TED'S): Oh, the impact from the design audit, um, wa- [sic], has been immense. The great thing about a design audit is it forces us to ask a whole lot of questions, and the process of asking those questions encouraged us to improve our business.
PRESENTER: So, practically, how does the design audit work?
GOWER: Well, for about two weeks, um, we present a whole lot of information to them, they go away, think about it, and they come and interview us and, um, they're trying to drill down and just find out how well we're performing in certain, um, aspects of design.
PRESENTER: As a result of the design audit process, you did to some degree re-invent the brand. Did that bring immediate results?
GOWER: It's interesting, in the design audit they said, we, we [sic] seriously question whether you should keep your, your [sic] name. So, they said you've got to think about whether you chuck out Phil & Ted's because it leverages this old movie, it's got these, ah, adolescents who are, ah, ah [sic], completely irresponsible. It says nothing about New Zealand. You know, are these the brand
values you want, and, ah, we had quite a discussion about it, and, ah, at heart, we felt there's a lot of value in the Phil & Ted's name, we just needed to better represent that by shortening down to Phil & Ted's, and, um, you know, leveraging that quirky irreverent, ah, flavour which has real cut through, and, you know, thank goodness we didn't, we didn't [sic] throw out the name.
PRESENTER: When you received the audit report, were there actions you took immediately...
GOWER: Ah, no. I mean, anyone who'll, who [sic] knows me will tell you that, um, I'm not someone who likes to accept things at face value, so [laughs] I, I [sic] saw the whole thing as quite a contestable process, you know, I wanted to challenge the assumptions they made and challenge their, ah, conclusions.
PRESENTER: Do you think the vitality of the brand lives in the people who work here?
GOWER: One thing we're pretty proud of is starting this, um, new brand called Mokopuna Merino, which is nothing about Phil & Ted's, it's merino clothing, 100%, ah, pure New Zealand merino, for 0 to 3-year-olds. The person who actually runs Mokopuna for us actually started, you know, in quality control, where we were sewing things in this factory. One of the, the [sic] great joys of growth is that you, you [sic] create opportunities for individuals. Brand values are values, and values are what drive people, so if you don't believe it then, you now, customers and, ah,
consumers are going to smell it, you know. It has to be real.
Which is only a problem for repatriating profits, since 100% of P&T's production and 95% of its sales are outside New Zealand:
PRESENTER: Phil & Teds is one of New Zealand's great export success stories. So, how are they dealing with the rampant New Zealand dollar. Campbell, the hot topic amongst exporters for some time now has been the strong New Zealand dollar. You've got a background in finance so I'm sure you've got an interesting perspective on that. Um, what are your thoughts?
CAMPBELL GOWER (PHIL&TEDS): Um, well we do make, ah, less money with the dollar where it is now, but, um, yeah, we've always accepted that. We're a business which is going to be, you know, 97% not sold in New Zealand, um, it's going to be 100% not made in New Zealand. So this is a business which we want to be successful in the world, so we're going to get, you know, whatever is left over after all those exchange rates have, ah, have, ah, done their business with
PRESENTER: So, you've accepted the changing value of the New Zealand dollar as a business reality from the beginning?
GOWER: Yeah, we accept that currency fluctuations is [sic] going to be part of our business, there's nothing we can do to influence that. We can just try and, um, develop our business model which is going to be successful, you know, whatever the New Zealand-US dollar rate is, by trying to get, ah, as many currencies as we can as a basket of income, and as many currencies as we can as a basket of expenses.
PRESENTER: That's interesting. A lot of people think that when manufacturers go off shore, it's because they're looking for the cheaper labour, but are you saying that it's also to do with taking out some of the impact of the high dollar.
GOWER: Oh, it's a very important part of it. I mean, obviously you are not necessarily chasing low labour costs, but you're chasing lower unit costs, and, you know, part of that's freight. I mean, if you want to manufacture our products in New Zealand, you've got to pay a lot of freight just to get the raw materials here. Then you work on them, then you've got to send it all the way back around the world, ah, to those markets. We, ah, receive sales in seven currencies and, ah, we have expenses in seven currencies, so, we try to build that natural hedge into the business. It's actually not as hard as you think. We never thought of it a [sic], actually as exporting, we just thought of it as more sales, you know, it's not really different from selling in New Zealand or, you know, selling in Lower Hutt or, or, um, ah, Auckland for that matter.
PRESENTER: Campbell, thanks again.
Part 4 -- Branding and the centrality of the P&T wheeled ampersand logo to the company's org chart:blockquote>PRESENTER: We continue our series on Phil & Ted's buggy company today, with a look at branding. The branding is radically different in a market that's dominated by familiar, sensible maternal images. So, how did it get to be that way. Heather, what's the story?
HEATHER CRICHTON (CREATE & ORCHESTRATE, PHIL & TED'S): Well, it's actually very deliberate, um, our previous branding was very dark, black, ah, and what we decided to do was actually bring it to life a bit more in retail, to add our personality, ah, we used language to, um, convey that personality in a quirky fashion. Um, so that made it completely different at retail, and it made it differentiate between other brands that were a lot more flowery, very Disney characterorientated.
PRESENTER: Looking at your branding, it's impossible to miss the ampersand character here, tell us about that?
CRICHTON: It's something that we use across not only in our logo, but in all of our marketing collateral, it's on everything we put out, um, and it's concise and consistent, um, right down to our business cards, where you'll see we've used the ampersand to really bring out the personality of the person that you're dealing with.
PRESENTER: Right, so for example we've got, ah, finance manager, Andre Cribb, who's also Mr Dollars & Cents, that makes sense, ah, Jason Crowe, new business, and mover & shaker, very nice. So you must, you must [sic] get a lot of people holding onto these cards.
CRICHTON: Ah, yeah, definitely, and it's great to get a lot of good feedback about them, and it makes people smile.
PRESENTER: So, it seems to me that a lot of your branding is actually communicating directly to the parents.
CRICHTON: Definitely, we've got, um, an intelligent customer base, um, sometimes they don't always want, um, light pink and pastels, and we offer them something a bit different.
PRESENTER: So how much do you think of the products' integrity is actually in the branding?
CRICHTON: A considerable amount, because if you have a fantastic brand but, ah, a product that doesn't deliver, um, your brand is reduced in the eyes of, um, your consumer, but if you can deliver on both, ah, points, if your product is awesome, um, and your brand is awesome, that experience you'll never forget and you'll pass onto other people.
PRESENTER: Thanks Heather.
Ends.Part 5 -- Where design comes from For some reason this is an interview about flexibility and not pigeonholing design in a small company, not about buying inventor-founded companies and turning their great ideas into viable products.
PRESENTER: We're back at Phil & Ted's buggy company, and today we're talking about design. Before you can have a great design, you have to have a great idea, so where do the ideas come from here at Phil & Ted's, and how do they keep them coming. Phil, what's the answer, where do the ideas come from?Part 6 -- MarketingThe presenter is the one bringing up Gwyneth Paltrow. Frankly, one of the greatest strengths of the P&T brand is not any celebrity halo effect, but its word-of-mouth credibility with parents on the ground.
PHIL BRACE (DESIGN LEADER): I think a big part of it is that we're all encouraged to be thinking about the products that we make at Phil & Ted's, we're all parents, we might be, ah, designers, we might be in marketing, but we're all encouraged to think about, um, where the next big idea comes from, and we're selfless about taking it further. I think it's interesting that, um, you know, we have less than 30 people in this company, and yet more than ten of them have creative training, whether in marketing, logistics or design, it's all about problem solving, I think that's a big part of it.
PRESENTER: So you say it's selfless this process, can you explain that.
BRACE: Well I think it's selfless in the sense that a good idea will always float to the top, we don't mind where the ideas come from, we just want to, we want to [sic] implement the best ideas.
REPORTER: How is the team structured here at Phil & Ted's?
BRACE: Instead of just having, ah, little jobs to do where it has no context for you, we give you a whole project, everybody has a project, they own the project from start to finish, I'm in the business of making stuff, and when I go to the back, back orders of some shop in, in [sic] London, and you see the product sitting in the window, you can't help but have a bit of a heart flutter.
REPORTER: Thanks Phil. So once you've got a great idea, you've got to get it out to the world, but how do you market internationally. Next week we look at Phil & Ted's international marketing strategies.
PRESENTER: Phil&teds buggy company has managed to convince people across the globe to buy their products, but how did they do it. Today, we talk about marketing. So where did you start, where do you start?Part 7 - Market Research:So P&T don't do market research; instead, they have a user-centered design approach, they find retailers in the markets they'd like to enter and talk face-to-face with them, and then they have dialogues with customers.
RICHARD SHIRTCLIFFE (PHIL&TEDS SHOW & TELL): For us it's about storytelling. Storytelling at a macro level; about the brand, about product categories and about individual products. Storytelling is the thing that helps everyone who's involved with the brand connect with the brand and understand the brand's relevance, and ultimately the product set's relevance to their lives.
PRESENTER: Basically, what's the story?
SHIRTCLIFFE: It's all about the parents basically. It's about ah helping parents; creating versatile, adaptable products that enable parents to live a dynamic lifestyle with the kids. You know, and that's very different from everybody else in our space, they're all about, you know, about the baby.
PRESENTER: Okay, so how do you approach a market like the United States. It's massive, it costs millions to advertise there, what do you do?
SHIRTCLIFFE: I think there's this tendency when you're this far away from, from the rest of the world to think in terms of the rest of the world as a bit of a scary place. Ultimately it's just about doing business in a different market. It's just about localising your business effort and therefore your marketing and you know, there's no substitute for just climbing on a plane and going and doing it, talking to retailers at a local level. And you, when they append a physical personality to a brand personality, they're there, they're into it, they love buying from you.
PRESENTER: Okay, so how do you get Gwyneth Paltrow pushing baby Apple in a phil&teds buggy?
SHIRTCLIFFE: You ring her and say hi, would you like one of our buggies. We're going to send it to you and see what you think. Why not?
PRESENTER: So a lot of your marketing is really about fame through association.
SHIRTCLIFFE: It's a lot about influencing. So influencing um people to understand how great the product is because they see it out there being used in the way that we think is appropriate, by having key influences. It doesn't need to be someone who's massively famous, it could be somebody who's very influential in their particular space, their particular community, ah and you know, picking those people out is a little bit about knowing the local market. But in the end, if you just go do it, try whatever you want to try, be bold about it, you know, you'll have some success or you'll learn stuff, and from that learning you'll have some success. But ultimately, it's just about doing it and doing it now.
PRESENTER (MATT LAWREY): Phil & Ted's buggy company exports to over 40 countries. Richard, that sounds like a lot of market research. How do you do it?Part 8 -- Online: telling the story, not just 'e-tailing.' Though they talk about telling the brand story online, I've always felt that P&T's website has had a strong shopping element since back in the day. And by that, I mean, "back in the day when there were only two retailers carrying the merch, and it was out of stock.":
RICHARD SHIRTCLIFFE (PHIL & TED'S SHOW AND TELL): Well, really we get into a market and we start doing business there, that's the obvious answer, ah, I think what you're asking is do we do market research and, and [sic] the honest answer is, no, we don't, um, in the classical sense. We don't feel that it's a great use of our time, energy, resource to actually get a market research company to go out and ask some questions for us, ah, we've got a lot of parenting knowledge in-house, we've got a lot of parenting knowledge in our distributors and our retailers
and in our Phil & Ted's heads consumers who feed us a lot of information from around the world, ah, and we've also got a lot of people like me in-house who, who [sic] are parents and so therefore ask a lot of of dumb questions, you know, we really feel like that, that [sic] combination means that we can get on and just do our thing and do it now and really, if we do it well and we get great products with the market, consumers will follow.
PRESENTER: Richard, a lot of people watching will be surprised by this because a lot of people in business are crazy about market research.
SHIRTCLIFFE: Yeah, they are, yeah, um, we just feel like, ah, we're better off not asking a lot of questions of a lot of people because that really just leads to decision by committee and it's the old adage, you know, that, um, a camel is a horse designed by committee, ah, we tend to feel that if we concentrate our efforts using the knowledge that we do have to make a great product, ah, aimed at a particular niche, that we know about, ah, that we will drive great product into the market and consumers will love it and they'll follow us and, over time, we'll tweak it and we'll improve it, we'll constantly innovate, constantly look to, ah, adapt the product to the market, ah, through information that we, ah, we receive from the market and decisions that we make in-house.
PRESENTER: When you do talk to consumers, what's the one question you ask them first?
SHIRTCLIFFE: When opportunity does present we do ask and that is quite simply, would you recommend this product to friends and/or family and why, because whatever the answer is, you'll learn some great stuff.
PRESENTER: So, if you've got a product and a, a [sic] marketing strategy that encourages a dialogue with the market, then, effectively, that's doing your market research for you.
SHIRTCLIFFE: That's what we believe, yeah. If we really understand what the core values are, the core brand values, and we ensure that there's a, this, ah, meeting of minds between, ah, the product side and the marketing side, ah, that, you know, we'll make great product [sic] and the market will love it.
PRESENTER: And so far this strategy is serving you pretty well.
SHIRTCLIFFE: Seems to be. Yeah.
PRESENTER: Richard, thank you very much.
SHIRTCLIFFE: Thanks, Matt.
PRESENTER (MATT LAWREY): Thanks to the internet, you can get into exporting now without leaving home and the internet has played a vital role in the success story that is phil&teds. So Richard here is going to talk to us about their website. Richard, is the site all about selling online?Part 9 -- Manufacturing Overseas i.e., overseas from NZ, which is everywhere. If there's any doubt about what'll happen to Mountain Buggy's NZ factory, the core arguments and strategy Gower laid out here should clear it right up.
RICHARD SHIRTCLIFFE (SHOW & TELL, PHIL&TEDS): Ultimately, everything we're doing is about sales, but, um, we don't, ah, concentrate on e-tailing. So, we feel that our role is to support our physical channel right around the world; by that I mean our retailers. Um, so, ah, focus with, um, with our internet presence, ah, is on helping our particular audience to, um, to get to that point where their decision is made. We know that, ah, they've got a flood of information and very little time, which equals overload. So, you know, for us, ah, the internet, our website, is about helping them to edit their decision making. In behind this site, um, is, ah, material which distributors can use, and which retailers can use to produce, ah, in-store promotions or train their staff, to give the staff the information they need in order to confirm that sale when people actually walk in the store, armed with this information that they've gained from our site.
PRESENTER: You know, you go to a lot of websites, and you do get sort of hit by this tsunami of information.
PRESENTER: Do you spend a lot of time trying to just, to keep the information to a minimum?
SHIRTCLIFFE: When they come onto the site, it's, ah, there's a little bit of a story happening there, and on the left hand side, we're, we're updating things constantly. Every other day there's a new story appearing in there about a, you know, celebrity that's picked up, ah, our, our buggy, or, you know, an award we've won for innovation. On the right hand side, it's about informing people immediately about those spaces that we're in in the nursery world, you know. We offer all of the, um, categories and products that shape a parenting day. Pushing, sleeping, feeding, carrying, driving, adapting. They, they get that story instantly, and then they can click through immediately and find out about the products within that. So, it's one click each time. From the home page, it's one click to find out about, ah, our products. So, we give them a little bit of information, a little bit of story and then straight into product.
PRESENTER: Thanks, Richard. We continue our adventure with phil&teds next week when we check out manufacturing overseas.
PRESENTER (MATT LAWREY): For many local businesses, manufacturing offshore is a financial fact of life. We're back at Phil & Ted's to see how they handle long distance manufacturing. Campbell, the decision to manufacture overseas, obviously a big step. What were your reasons?Part 10 -- Compliance, or as the presenter puts it, doing business in "the US of A, the most litigious society on Earth."
CAMPBELL GOWER (PHIL & TED'S CHIEF COOK AND BOTTLE WASHER): The world's [sic] really has a lot of factories but it doesn't have um, a lot of ideas so we felt we could take ideas and have them made in a factory where people actually know what they're doing rather than us doing it, then that would be better for our business.
PRESENTER: We have factories in New Zealand though, why did you go to China?
GOWER: There's not a lot of reason why we should import a whole lot of steel and fabric from Asia into New Zealand trying to add some value to it here, pay the freight into and out of New Zealand then send it back to Europe so it is about being closer to markets as well.
PRESENTER: How do you go about finding ah, a decent manufacturer in a place the size of China?
GOWER: Well you've got to turn over a lot of rocks. Ah, the manufactures [sic] we're with now ah, it's probably a six or seven year relationship. We're very worried about our ah, IP getting nicked um, so we didn't want to go to a strong manufacturer and we'd be their newest smallest customer and have all our knowledge given to their largest customer. Ah, I don't actually think it works like that but that's what we were afraid of then. So we went to a whole new industry who understood about sewing and ah, bending tubes, riveting things, drilling things et cetra and ah, we built capability in there to make products for us.
PRESENTER: What about the factory itself. A lot of Kiwis have this image of Chinese factories all being sweatshops, what are we talking about?
GOWER: Well it's certainly not the case with us so one of the reasons we actually go and look at factories is that um, you know, we want to know that we're not having our products made in a place like that, you know, it's actually not good business practise anyway. The relationships we have now, he's actually built a new factory three times and kept growing his capability and capacity as we've grown, you know, now we go there and, you know, look in um, a purpose built factory which is, he only has one customer and that's Phil & Ted's.
PRESENTER: Thanks Campbell.
PRESENTER: Getting your product into a foreign market is one hurdle. Making sure it complies with the maze of international compliance regulations is quite another. So, Campbell, how do you handle the issue of compliance here at Phil & Ted's?Part 11 -- R&D: not much here, really:
CAMPBELL GOWER (CHIEF COOK & BOTTLE WASHER PHIL & TED'S): Well, we accept that regulation's a fact of life, and I guess there are two main forms of regulation which affect us, there's the regulation you need when you come to doing business, and that is pretty much the same with local variations in every market in the world, but for us, a big area is product safety regulations, and they vary country by country. For us, we just do it step by step, product by product, market by market.
PRESENTER: So, how do you go about finding out how to comply?
GOWER: Well, we belong to a number of, ah, organisations which publish standards. Ah, and we, ah, are members of industry bodies which monitor these things, so it is reas-, reasonably easy for us to get the information that we need.
PRESENTER: Do you have to constantly keep your eye on changes to compliance issues around the world.
GOWER: Yeah, absolutely. And in fact, some of these regulatory, ah, instruments are an effective, ah, trade barrier for us, so we have to keep an eye on those.
PRESENTER: Some people say that compliance is such a big deal, there's little point in actually being in business.
GOWER: No, I think there is a point in being in business, and I think, you know, regulation is a fact of life and what you have to try and do is get your systems organised so that compliance becomes something that you do rather than something that actually breaks you down.
PRESENTER: Campbell, you sell buggies in the US of A, the most litigious society on Earth. Um, you know, how do you handle that. You've got buggies out there, sometimes wheels come off, babies land on their heads. What does that mean for business?
GOWER: Well, none of those things actually happen, but it is something you do lose sleep about. You know, you have to acknowledge this is, ah, one of the biggest risks of doing business in America, you know, we buy insurance and we try really hard to get our systems and our, our products right, so we can satisfy that market.
PRESENTER: Do you sometimes have people tell you, sorry, it can't be done?
GOWER: Yeah, all the time, all the time. You know, you have to work hard to break down some of those barriers and prove that you can do, you can do it how you want to do it.
PRESENTER: And is that about seeing people, you know, in person, and really putting your case to them?
GOWER: Yeah, it's the same old stuff. You roll up, you make a promise, you deliver on your promises and you follow up. But yeah, I think that's the new No. 8 way, mentality is that you, you use what resources you have available and you try and make that work in the market where you have to.
PRESENTER: Thanks, Campbell. Next week we look at the all important issues of research and development at Phil & Ted's.
PRESENTER (MATT LAWREY): Research and development is key to any business that wants to grow, and here at Phil & Ted's, everybody plays a part. Phil, how important is R&D here at Phil & Ted's?Part 12 -- The Future: Gower sounding ambitious and self-effacing, not at all dickish, in fact. If only the video weren't down, we could confirm it. Maybe it's just Kiwi hospitality, but the fact that these guys came back and did these interviews week after week for three months shows Gower to be a man of great patience and good will.
PHIL BRACE (DESIGN LEADER AT PHIL & TED'S): R&D is critical at Phil & Ted's, in fact, it's really all that we do. A traditional view of, ah, R&D might be, you know those brainy people with pointy heads and glasses, doing all this work out, out [sic] the back, boffins if you like. But really, it's just about product development for us. It's about finding out a real need, and setting about to deliver a product around those, that, that [sic] need.
PRESENTER: How does that work?
BRACE: Well, everybody plays a part because we're all in the business of making product, whether it's designing product, procuring product, selling product, we're all involved. So, we're all involved in capturing the detail and data we need to develop new products.
PRESENTER: And how long does that take?
BRACE: Well, this product behind us here, which we released two weeks ago in Europe has been on our drawing board since the 1st of January 2007. Our development curve is very, very swift.
PRESENTER: So, why do you want to make things so quickly?
BRACE: Well, we just believe that if you can, you should. So, we set about and do it.
PRESENTER: So, why does that work for you?
BRACE: We all function in our, in our [sic] roles at the front end of the business rather than the back end of the business. Everything we do is real, and used today. We want to get products in the market so we can make money, so we can make more products.
PRESENTER: Phil, do you think other companies could emulate what you do here?
BRACE: Of course, we work completely in sync with the goals of our business and of our CEO, and if he believes in what we do, he pushes it down from the top, and it, and makes it happen. If you try and push ideas in the middle of the business, up to the top, often you'll have, you'll have [sic] failures. So, I think it's really about having good synergies with, um, the management of the company.
PRESENTER: So, how do you get the same goals?
BRACE: I think it's all about moving the business forward, not sideways. We don't all agree all the time, but it's still important to keep moving forwards [sic]. I think in product development generally, businesses get caught up in doing sideways loops, I've got a better idea, I've got another idea, this'll work even better. But in actual fact, it takes you nowhere. It's important to move on. So, sometimes when we agree to differ, it allows us to move on.
PRESENTER: Thanks, Phil.
PRESENTER (MATT LAWREY): Over the series we have looked at the many things that go into making Phil & Ted's an extremely successful business. So, Campbell, are there any challenges left for you?
CAMPBELL COWER (CHIEF COOK AND BOTTLE WASHER, PHIL & TED'S): Oh, very definitely. I mean, we, we [sic] face challenges every day, and, you know, that's part of the, the [sic] thrill of the chase, really, is overcoming those challenges.
PRESENTER: So, where to from here?
COWER: I've always had the feeling, um, that we could have a business which is about double the size that it is today, and, ah, I've had that feeling for a couple of years now, so each year we keep doubling it's, it's [sic] quite good to feel that, you know, we can do that again. But I, I [sic] look now, and I think our foundation is, you know, is strong as it's ever been, when I think about the, the [sic] new product we've coming down the pipe, then I think all that's pretty easily achievable.
PRESENTER: So, ten years from now, Phil & Ted's, what will it look like, will it just be a baby buggy company, or will there be a lot more to it?
COWER: I think there'll be a lot more to it, we're in other categories now, so what we're trying to do is expand our participation within those categories. Yeah, we've got, ah, three products which are unique in the world, you know I'd like to think we can come up with, you know, new category killers to put alongside those.
PRESENTER: And how are you going to maintain momentum, just in terms of, you know, the emotional investment you put into the company?
COWER: Well, I, I [sic] think there's a lot of people here with emotional investment, and, you know, if you hire terrific people and, you know, get them aligned with the company's thinking and what you want them to do, then get out of their way and you'll find they go and figure out how to do it themselves.
PRESENTER: Ten years ago, if I told you that Phil & Ted's was the, the [sic] size it is and the success it is today, would you have believed me?
COWER: No, I'd ask what you've been smoking.
PRESENTER: Campbell, we've been coming here for 12 weeks, we've learnt lots, it's been amazing, but I'm sure some viewers will be thinking, you know, they've done something incredible, but I couldn't do that.
COWER: Oh, I think if, if [sic] we can do it, anybody can. You have to understand that we knew nothing about this business when we started, but, you know, we did more things right than we did wrong and you keep at it, and after nine years you're an overnight success.
PRESENTER: Well, Campbell, thank you so much for all the information you've shared with us, all the advice you've given us, and all the time you've given us, you've been extremely generous, and best of luck with everything that's ahead for Phil & Ted's.
COWER: Thank you.
PRESENTER: And this, ladies and gentlemen, is the team at Phil & Ted's.