How “Good to Great” worked for me and OrotonGroup

During my time at Oroton, first in the US and then in Australia, we overcame some huge hurdles. My first stint with OrotonGroup was restructuring the US subsidiary and selling it to a group of investors. This took about three years and we faced a myriad of problems from bad outsourcing contract to bad relationships with our department store customers to poorly implemented IT systems. We struggled with a brand that was top tier in Australia, but was virtually unknown in the U.S. Foreign brands trying to enter into the U.S. need to understand what it takes to succeed in a vastly different environment with geographical considerations, more competition and 10 times the population. (More on this in a future article)

We successfully sold the US business and created a franchise arrangement with the new owners. At the end of this process, I casually told the owners of Oroton that if their COO ever quits in Australia, please give me a call. Two years passed and I got a phone call from Ross Lane, the MD of Oroton, who informed me that the COO just resigned and asked if I was serious about moving to Australia and taking over as the COO. I flew to Sydney the next week, accepted the job and moved over a few weeks later.

At that time OrotonGroup was about a $75M company and had Oroton, Ralph Lauren and recently acquired Morrissey. It was making money but was struggling with several aspects of Operations, including a stock turn of less than 1.

After getting my feet wet and getting to understand the business inside and out, Ross and I were introduced to a book called “Good to Great” by Jim Collins. We both read it and liked it so much, we bought copies for the entire management team and adopted the philosophies and terminologies from the book. It began a several year ride of taking a successful business and making it better and better.

The main philosophies in the book were (which I will explain in further detail in future blogs):

  1. You need Level 5 Leadership
  2. First who….then what
  3. Confront the brutal facts
  4. The Hedgehog Concept
  5. Culture of Discipline
  6. Technology accelerators

During the time that I was COO and while we were living the philosophy in “Good to Great” we accomplished great things.

  1. We doubled the size of the business from $75M to $150M and doubled the share price at the same time.
  2. During this growth we managed to keep inventory at the same level through the implementation of a proper merchandise planning department. We more than doubled the stock turn and were on course to get it to be where it should be even with the obstacle of buying Northern Hemisphere Ralph Lauren product for the Southern Hemisphere.
  3. We consolidated three warehouses into one efficient distribution centre.
  4. We moved our head office from the northern beaches of Sydney to the CBD to be closer to our partners.
  5. We issued further shares and raised the capital needed to buy Marcs (seemed like a good idea at the time – more on that later).
  6. Outsourced our clothing manufacturing capability to Apparel Group as it wasn’t our core focus.
  7. Launched the Aldo brand into Australia through a licensing agreement.
  8. Cemented a great working relationship with the executives at David Jones that secured us as one of their top suppliers.
  9. Implemented a new end to end ERP system that, after a few hiccups, was the foundation that OrotonGroup built on and continued to grow with.

This is just a taste of what can be accomplished when you follow the right management philosophies and direction. “Good to Great” helped immensely during this great building phase at OrotonGroup.

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