Embracing Change Rethinking corporate culture By Ross Lai Clothing giant's change of direction contributes to a remarkable turnaround in business fortune One of the notable successes in Hong Kong's retail industry in the last few years has been the dramatic turnaround in operating results for Bossini, one of the territory's leading retailers of casual wear. The improvement was due not just to business skills, but more fundamentally to new leadership and a new corporate culture. Consider these figures - on the financial year 2002-03, Bossini made a record operating loss of HK$66 million, while in 2003-04, it made a record profit of HK$146 million. Good news, of course, for the company itself and its shareholders. But the real significance of this is that underlying this change of fortune is the almost complete change of blood in top management, and the introduction of "the Bossini Way". Bossini is a retail chain of casual wear for men, women and children. It operates a total of 678 outlets in 20 countries in Southeast Asia, the Middle East, Europe and Latin America. About half of these outlets are directly managed while the rest are either authorised dealer outlets or overseas licensed outlets. It serves four core markets - Hong Kong, Mainland China, Taiwan and Singapore - and has a total of about 3,200 employees. Why did the operating profit increase so significantly in the past two years despite only a slight increase in turnover of about 5 per cent? "The fundamental reason is we have changed from a sales-driven operation to a profit-driven one. In the past, our focus was on expanding our market share. Now the focus is on increasing profit by boosting productivity on the one hand and saving costs on the other," says Kathy Chan, Bossini's director of finance and company secretary. In 2002, Bossini increased the number of its outlets in a bid to increase business. However, the economy deteriorated and competitors aggressively marked down prices to clear inventory. This resulted in an operating loss. In 2003, they consolidated the sales network by closing 13 stores that were performing poorly. "In terms of product positioning, Bossini made a mistake by venturing into high fashion. This did not work, and so now we have developed a 'brand book' that clearly defines our product direction," says Ms Chan. Asked what Bossini's current product direction is, Ms Chan says, "Basic, mass appeal, comfort, colourful, easy to mix and match, diversified, and value for money." We have changed from a sales-driven operation to a profit-driven one New leadership Kathy Chan is one of Bossini's six executive directors. With the exception of Law Ka Sing, who is also the chairman of the board, all the other executive directors joined the company within the last three years, replacing the original board members. In addition, the company has created two new posts - director of sales and marketing, and director of global business development. "The change of blood has enabled Bossini to take on new directions without the burden of tradition," Ms Chan notes. "At the root of our business turnaround is the launch of a new culture - what we call the Bossini Way," she adds. New culture Introduced in mid 2002, the Bossini Way embraces the company's vision of becoming the brand leader, the mission of creating incremental value for the brand everyday and in every way, and the shared values of employees and the company committed to serving each other's interests in the best possible way. It also encompasses the Seven Habits of Highly Effective People as defined by management guru Stephen Covey. Bossini's chairman Mr Law is a firm believer and advocate of these Seven Habits. Earlier this year, Bossini set up the "Seven Habits Steering Committee" to plan and implement the promotion of this culture. In May this year, the committee articulated its mission "to be a dedicated inside-out role model and coach in habits striving to help each colleague become a total seven habits person and ultimately building a highly effective team" . "In short, we are actively seeking to become a truly learning organisation. We all have to take part in training and development, from directors through the middle management right to the frontline shop assistants," she adds. "The past year, 2003-04, was a year of system building. We had our new business direction focusing on profitability. We have also built our new culture centered on the Bossini Way. This year, 2004-05, the focus will be internal strengthening by enhancing efficiency and people quality. From then on, we will implement aggressive market expansion," she says. Then and now Before record loss sales-driven, focusing on market share traditional vertical management structure lack of well-defined culture training not a priority After record profit profit-driven, focusing on profitability new management after complete rethinking of corporate culture aggressive training and promotion of learning Taken from Career Times 3 September 2004 Your comments are welcome at [email protected]