egonomics by Marcum David & Smith Steven

Author:Marcum, David & Smith, Steven [Marcum, David]
Language: eng
Format: mobi, epub
Publisher: Fireside
Published: 2007-09-03T16:00:00+00:00

humility’s traction

As we mentioned earlier, egonomics is a study of great moments, not great leaders. But over time crucial moments build reflexes in us that keep us closer to the center of humility’s equilibrium or push us farther away. Of the interviews we conducted for the study of egonomics, one of the more remarkable set of reflexes we observed was that of Jim Thyen.

Thyen is CEO of Kimball International, a $1.2 billion furniture and electronics company. Given our emphasis on economic performance and ego’s role in that performance, some might be surprised that we’re writing about a company whose sales have been flat for five years. To an outsider, Kimball certainly wouldn’t seem to qualify as a good-to-great company. But the numbers on the outside don’t always reveal the story on the inside. The transformation to greatness is usually reported at the end of the road, when remarkable results sing the company’s praises and the glamour of a goal reached conceals the labor and sweat it took to get there. This is a story of sweat.

Kimball International began in contract furniture in 1949. From there it expanded and diversified. Television cabinetry in the 1950s, pianos in the ’60s (at its peak, Kimball made over 250 pianos and 150 organs every day), commercial office furniture in the ’70s, and residential and hospitality furniture and electronics in the 1980s spurred the company’s growth to $1.2 billion with over nine thousand employees by 2000. Named to the Fortune 500 in 1988 for the first time, Kimball was twice included as one of “America’s Most Admired Companies.”

But that was about to change.

Kimball’s consistent performance over decades caused everyone to feel good about the business. During the good times, Kimball lived by the “might as well” strategy. They expanded horizontally and vertically, continued to invest in pianos simply because it was their legacy, and moved into markets when customer demands in those markets was changing rapidly. Despite the changes, they told themselves they could do it all. But when they did it all, the diversification masked the rapid changes coming. Markets started to shift, the effects of a recession began, and revenue in certain business units dropped suddenly, accelerated by September 11, 2001. Kimball’s overall market declined from $12 billion to $8 billion.

Over the years, Kimball slowly insulated itself. “We weren’t recognizing that the ‘water in the pan’ was getting warmer one degree at a time,” said Thyen. “Our headquarters was located in a community where most people shared similar experiences and mind-sets. For instance, self-reliance was ingrained into the company culture, and that self-reliance naturally comes with a strong sense of pride, which gradually led to isolationism. The similarities among us were so strong that changes in the market didn’t send alarm signals. I feared we were headed down the slippery slope of entitlement. We believed the world should come to us.”

While Kimball waited for the world, the world didn’t budge. Globalization and the Internet changed the customer relationship with manufacturers. Reading customer expectations was no longer simple.

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