When Edith Heath founded Heath Ceramics in the 1940s, the legendary artisan likely had no idea that her work would end up in places like New York’s Museum of Modern Art. But when husband-and-wife team Robin Petravic and Catherine Bailey purchased the Sausalito, California-based tableware manufacturer in 2003, the luster of Heath’s company was fading.
Sales were lagging. Standard operating procedures were nonexistent. And morale was low. Using their background as industrial designers, Petravic and Bailey set out to redesign every aspect of the company. All changes would be based on a key principle of good design: simplicity.
“There’s been a lot of emphasis on big innovation,” says Petravic. “I think a lot of people have forgotten the importance of just doing something simple and doing it well."
Seven years later, Heath’s “redesign” is a resounding success. Sales that barely topped $1 million in 2003 are projected to hit $9 million in 2010. Here’s an inside look at how you can redesign your company the Heath Ceramics way:
Tell your story. Every business has a story to tell. Heath Ceramics has a rich history of producing tableware and tile. Petravic and Bailey used this to their advantage. "We don't always call it marketing,” says Bailey. “Our strategy is to make sure we tell the story really well."
Heath tells the tale through factory tours, tools like its website, and especially press and blogs. “We would really rather have people tell the whole story than … just take out an ad and have people just recognize the brand,” says Bailey.
Focus on direct sales. According to Petravic, direct sales channels generate almost 80 percent of Heath’s revenue. This includes its website, three retail stores, and direct sales to restaurants, contractors and homeowners.
“We really enjoy being directly connected with our customer,” says Bailey. "It also makes a lot of business sense because we’re making a much better margin on our products when we're selling to them directly.”
Collaborate with strategic partners. Though online wedding registries have been a major success for Heath Ceramics, they also presented a challenge in the beginning. “One of the big shortfalls when we first put registries up was that all we sold were dishes,” says Petravic.
This led Heath Ceramics to partner with outside designers who created complementary products. “It really makes Heath a better place for [customers] to shop,” says Bailey. “We're meeting more of their needs." Today, Heath partners with multiple designers, like flatware maker David Mellor and linen maker Skinny LaMinx.
Charge your real cost. Heath Ceramics products aren’t inexpensive. Some mugs retail for $28, and an iced tea set goes for $175. But Heath’s retail prices reflect what they define as the “real cost.” This includes the high overhead of manufacturing in the United States.
“The idea that manufacturing is all about competing on price is kind of fed by the idea that shoppers only want the cheapest stuff they can buy,” says Petravic. “There's certainly a market for a company our size where we focus on the value."
Revamp your company culture. A major challenge for Petravic and Bailey was revamping Heath’s staid culture. Their first step was to convince employees that their goal was to create a strong company for the long term. "Both Cathy and I don't really understand this concept of building a business to sell it,” says Petravic. They implemented a production bonus plan and employee morale immediately increased.
Second, they created transparency across the company, providing employees with access to the company’s financials and metrics, excluding payroll. “Transparency enables everybody to be galvanized toward the same goals,” says Petravic. “It's about organizing your team of people, getting them motivated, giving them clear tasks.”
Since 2003, Heath hasn’t laid off any employees, reduced pay, or cut any benefits — and that’s part of what makes it a “Cool Runnings” company.
Antonio Neves is the host of Business on Main’s Web series, "Cool Runnings," and a correspondent for NBC NextMedia Productions. Check him out at www.antonioneves.net.