| Elica: business evolution through design, process and ICT |
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Massimo Lo Campo, Chief Business Integrator Officer of Elica S.p.A. From “cooker hoods producers” to “air handling”: a decisive change in the business definition, focusing on need satisfaction, user functionalities and customers to address, so as to widen the competitive range and reduce the risk of losing positions because of replacing products and new technologies.
Elica was established more than thirty years ago as a typical cooker hoods subcontractor, able to allocate productive forces, and guarantee efficiency and flexibility. Competing in this volume driven business requires continuous improvements in efficiency so to sustain a system with prices decreasing year by year. This situation forces the management to change the business model, how? Introducing a self-branded production, creating new product-market segments and modifying the value proposition towards OEM (Original Equipment Manufacturer) customers. The starting point was to change the business definition: from “cooker hoods producers” to “air handling”. This enabled Elica to abandon its original product-oriented model and replace it with a more market-oriented approach, focusing on need satisfaction, user functionalities and customers to address. So, Elica could widen its competitive range and reduce the risk of losing positions because of replacing products and new technologies. To do all this, it was necessary to adopt some strategic levers:
Design is an important lever, considering that the 80% of customers buy cooker hoods according to their personal aesthetic preference (source GFK). In Elica design means a dance of seductive silhouettes, colours, prescious details, attention for the particulars, new materials… echoes of art, nature and basic geometric patterns… aiming at concepts of lightness and elegance. We firmly believe that one of the main design aspects characterizing all our products is: being an evergreen!
The key role of design enabled Elica to:
Today Elica has a turnover worth about 430 M€, an Ebit worth 22 M€ and a ROCE worth the 8.7%. In order to support the business plan we developed an information technologies evolution strategy, working in the two main fields:
The fact of contributing to Elica’s business strategy by opening the company to customers, suppliers and partners in general, convinced us to employ an integration system (TIBCO) and to implement a SOA (Service Oriented Architecture). Our objective was to adopt an IT strategy (SOA, precisely), in order to organize and change discrete functionalities of corporate applications, into new interoperable services, based on standards that can be combined and re-used. We are fostering a transition from a “Spaghetti” architecture to a “Best-Of-Breed” one, reducing costs and system complexity. Business definition, design, information technologies, new organizational structures, roles and responsibilities, business process re-engineering, integration between customers and suppliers are only the hardest sides of Elica evolution, but alone they are not enough for a company to be successful. It is also necessary to pay attention to softer aspects: people and their resistance towards change. The most important factor to perform such an ambitious evolution is the fragmentation of goals in sub-goals combining each one with specific sub-projects and checking them within a short time. This enables the company to plan a strategy as a series of coherent tactics, bearing in mind that “everything leads to another thing, leading to a further thing… and if you focus on doing the smallest, then the next one and so on… you will discover yourself to do great things, having done only small things” (J. H. Weakland). |
“The best way to foresee the future is to invent it” (F. Ford Coppola). Companies dealing with the business of convenience durable goods (like household appliances) know this very well, because they have to face a hard competitive challenge, with more and more reduced margins, and a dependence on commodities (copper, steel, ferrous materials, etc.) continuously increasing in price. Moreover, there are many new Asian competitors (Samsung, LG, Haier etc.) that are determined, aggressive and equipped with a lot of financial resources.
Elica has considerably grown, not only organically, but also with respect to external production lines, through the acquisition of other companies operating in the same sector or in related ones. In fact, we aimed both at a vertical integration (let’s consider motors) and at a rapid gain of new market shares.