Business Exposed170
generally tends to excite your people, employees and customers
alike.
It is OK to get lucky – even for a top manager
Let me tell you a story about innovation. A story of a company
called Hornby. If you’re British, you’ll know it. You might even be
feeling slightly nostalgic merely thinking about it. Hornby makes
model trains, and has been doing so for a very, very long time.
Ten years ago the company was nearly bankrupt. In an attempt
to save costs it decided to outsource production to China.
However, much to its surprise, it discovered the Chinese not
only produced goods much cheaper, they also delivered superb
quality. Therefore, middle managers could not resist spending
all the money they were saving through the outsourcing on
adding additional quality in their product designs and, most
of all, a lot of extra detail: a working light on every table in the
restaurant carriage, windscreen wipers on the locomotive, a bit of
dirt (painted) on the bottom of the carriages, etc. Their products
became perfect scale models.
Then, as much to their surprise as to their joy, they noticed sales
increasing substantially. When it persisted, they started talking to
their vendors to gure out what on earth was happening. They
discovered that it was no longer fathers buying model trains for
their children, but fathers buying them for themselves (and, in
the process, spending quite a bit more money on themselves
than on their children . . .). Inadvertently, Hornby had moved out
of the toy market into the hobby market, producing for collectors
rather than children.
And they thought, “That’s not a bad idea! Let’s focus on that!”
Not long thereafter, Hornby was outperforming the FTSE dramat-
ically, seeing its share price rise from 35p to £2·50 in just a few
years.
But what can we learn from a story like Hornby’s? Isn’t their
smart change and innovative strategy simply due to sheer
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