Unassuming risk-taker

By MARK STORY

As committed as Fisher and Paykel Appliances boss John Bongard, 49, is to the company's success, family comes first. To prove it, he's just taken a week off with his wife Diane and their two school-age children for the September holidays.

The capital market may not agree with Bongard's priorities, but that's just the Fisher and Paykel way. And after 30 years there, he's the epitome of everything the firm holds sacred.

A South Auckland boy made good, Bongard was destined to become the company's top man since joining as a cadet after leaving Papakura High in 1971. By the mid-1980s, and after completing a double degree (part-time) in economics and marketing from Auckland University, he'd became instrumental in unlocking offshore markets, especially Australia.

John Cairns, research analyst with broker Forsyth Barr-Frater Williams, attributes much of the company's innovation-based branding to the Bongard-imposed sea-change from engineering firm to global marketer. His rise to general manager of the whiteware group in the late 1990s was followed by his ascension to managing director of the appliance company following its split from its healthcare counterpart in 2001.

Under Bongard's guidance, Fisher & Paykel Appliances went from nil to around a 25 per cent share of the Australian whiteware market in just 13 years. With revenue nudging $1 billion, the company now sells more than one million units into more than 40 countries yearly.

Shy and modest, Bongard is just not into talking about himself. Ask him what it takes to create a multinational success story from the bottom of the world, and this reluctant media debutant is equally coy about business processes.

That's understandable, says Peter McElroy, general manager with long-standing supplier Amcor Kiwi Packaging, as these processes drive the company's competitive advantage.

Bongard admits the company wouldn't have revealed plans for a global alliance with the world's biggest appliance maker, United States-based Whirlpool Corp, so soon if the new publicly listed company continuous disclosure regime hadn't made it. Access to Whirlpool's distribution channels, says Cairns, could crack open the company's toehold in exports beyond Australasia.

With a 55 to 60 per cent share of the Australian and New Zealand market, Bongard's mantra is simple: export or die. Yet he'd rather just get on with the job than immortalise the company's export model with corporate edicts.

Fisher & Paykel Appliances once tried pinning down its formula for success, recalls Bongard, but fearing it might over-sanitise what makes the company unique, decided to leave it unwritten.

What does make the company unique, he says, is a curious mix of fun and firmness, a "kiwi-ised' version of Japanese management practices, and respect for staff.

"We believe in running the business through strong staff participation. That's why factories are divided into small self-managed operating teams."

So what does it take to run a multi-site, multi-national workforce consisting of 2200 people in New Zealand, 500 in Australia, 50 in the US, 12 in Europe and one in Singapore?

Bongard admits it's all about teamwork, joint decision-making, and being prepared to make mistakes. After all, he says, that's where true innovation comes from.

It's clear to McElroy, who first crossed paths with him 15 years ago during his stint in South America, that Bongard still has the high respect for a family business culture that most New Zealand firms have lost.

"John's successfully interpreted those values into his management culture," says McElroy. "By allowing lots of accountability and responsibility through his team, he's created a fertile culture for risk-taking."

As rookie exporters, Bongard and co mistakenly assumed Asia would be the company's key offshore market. But they eventually realised that competing against large-run, low-margin manufacturers at the bottom-end of mass markets like Asia is a mug's game.

Bongard finally concluded that technological developments gave Fisher & Paykel Appliances a chance to position its products at the premium end of niche markets. But to do that, he believes it is essential to have "hero" products - technological groundbreakers that create the brand - in every export market. In Australia, it is SmartDrive. In the US and Europe, they are SmartDrive and DishDrawer.

"In terms of innovation, DishDrawer is a world leader, as is SmartLoad, the world's first top-loading clothes-dryer we're launching in the US," says Bongard.

Using a rugby analogy, Bongard believes exporting is all about understanding unique markets. "Australia and New Zealand are the tight five. Without this scrum, we can't feed the ball out to the flashy backs, like the high-margin US and European markets."

So how will Bongard continue growing Fisher & Paykel Appliances as a world leader in whiteware from New Zealand? For that he has a two-tiered product-development strategy. The technological groundbreakers that result in a new generation of products come along about every five years, he says.

To complement them, the company also has a "refresh" strategy, designed to add value to existing products.

That's why the company research and product development plans span nine years, and why it is investing around 7 per cent of profits in research and development when most New Zealand firms struggle to spend 2 per cent.

So does exporting into global markets from manufacturing bases in Auckland, Dunedin and Brisbane really make sense? After exploring manufacturing options in Mexico, the US and Ireland, Bongard is convinced New Zealand is the best place for manufacturing expansion.

The quality of the local labour force goes a long way to explaining that, says Bongard. The skilled and semi-skilled labour pool is relatively cheap compared with, say, Europe or North America.

He also praises the national work ethic and New Zealanders' ability to think outside the square, interpret what's required and get on with the job without too much fuss.

Then there's the availability and and price of raw materials and capital-related issues.

"For example, establishing a greenfield plant in Chicago would cost 10 times the amount needed to expand existing plants," he says. "Fisher & Paykel Appliances enjoys a privileged position within New Zealand. We have a lot of R&D and others things going on locally and we're not about to move."

But for budding exporters out there, Bongard says he's learned it's vital to bed-down the right distribution strategy for every offshore market. Simply expecting Kiwis to successfully run overseas operations isn't the answer.

"You can't export unless you have a unique product to sell. A lot of success after that comes down to people.

"Once you've decided how you want to distribute, you need to establish the right product suitability and pick the right partners. That means employing local people who understand the uniqueness of each market's distribution channels."

In the past 30 years Bongard, like so many of Fisher and Paykel's long-serving staff, has never contemplated jumping ship. So how does he keep staff committed to the company's success story?

What really creates loyalty, claims Bongard, is the enjoyment of working with a global brand inside such a unique business culture. "In addition to providing in-house training and excellent working conditions, every employee can participate in the staff share scheme."

There's no rocket science to the company's success, says Bongard. But when you've done it for so long and made so many mistakes, there's a danger in assuming the model is easily copied. That's why he says it's so important that exporters enter each new market with their minds wide open.

"If you're not making mistakes, you're not pushing the boundaries. The key is not to make the same mistake twice."