What do you get when you combine five bankers, McKinsey and a CEO who knows nothing but marketing? Propriety prevents me from getting too graphic as to exactly what sort of cluster that crowd creates – suffice to say it is an outcome so ugly as to be laughable.
I have to confess that I was suffering from a touch of writer's block, and fell back on one of my reliable solutions – that is to look to any company with the word 'Brands' in its name. The theory that a first class comedy could be written from the press releases of the 'Brand' companies took seed when I began consulting with Wahl Clipper, and saw them clean Sprectrum Brands' (Remington has the misfortune of being one of the Spectrum brands) clock. It was a hoot when I moved on to Furniture Brands. They continue to entertain, now moving from China to Mexico and still losing money.
The banking - McKinsey fiasco centers on a three ring circus called Pacific Brands. In fact, they are a lot like Furniture Brands. The big brains at Furniture Brands declared, "I have frequently pointed out that we are not really a manufacturer," right before they started closing plants, moving to China, and losing money. At Pacific Brands, Sue Morphet – their big thinker – said, "The future of Pacific Brands is not in clothing manufacturing." She then proceeded to close all of their Australian plants, kick 2,000 Australian employees out on the street, outsource everything to China … and continue to lose money. More and more is appears they aren't in clothing selling either.
The story is made especially comical by the Pacific Brands proclamation that they operate by values including "Informed Decision Making": "We do our research and make well-considered decisions. We act decisively and take the right action, at the right time, based on insight and informed judgement." And then take the advice of bankers and Mc"One strategy fits all"kinsey … and take decisive action in 2009 … about a year after everyone else started to realize that going to China may not put them in the land of mild and honey after all.
The best part of the story is that Ms. Morphet and the Pacific Brands gang is getting their collective gludius maximi handed to them on a platter by Inditex' Zara chain – the Spanish outfit Dan and I have written about that is driven by speed – a couple of weeks from concept to market in order to minimize cost and be hyper-responsive to customer needs. And the Australian retailers are competing with the likes of Zara by cutting out the middleman – Pacific Brands – and going straight to China themselves. "Some of the country's biggest retailers, such as Myer, have gone to factories in China to produce cheaper house-brand merchandise."
The bottom line – the moral of the story – is that Pacific Brands had a manufacturing problem. Too slow, too much inventory, too high costs. Bringing five bankers, McKinsey and a marketing wizard together to solve a manufacturing problem is like calling Kevin, Dan and me in to sort out an issue with the space shuttle – clearly the wrong men for the job and nothing good is going to come from it.
It seems obvious, but if the company can't manufacture well enough, they need to get some smart manufacturing people in to straighten things out. No one should be surprised, however, when the best bankers, McKinsey and a marketer can come up with is to ship manufacturing 5,000 miles away from the customers and let someone else deal with it.