From a Hudson Valley Apple Orchard to Urumqi, China
Ethan Allen’s CEO on leadership principles, manufacturing trends and globalizing an American brand
Published: Sunday, October 23, 2011
Updated: Saturday, November 5, 2011 18:11
Farooq Kathwari pauses. The calming rhythm and regal timbre of his voice subside, letting the vivid images he's painted with his words – Kashmiri mountains at dusk, a raucous cricket match, a printing press on Canal Street – fill this brief moment of silence to the brim. Resuming the conversation, he takes me on an imagined walk through his apple orchard upstate, along the way explaining the delicate balance of art and science a CEO has to get right when running a business. Kathwari (MBA '68) confides, "A fruit tree is much like a company. You have to prune it constantly, make it efficient every year, but you also constantly have to manage how much you prune, because if you overdo it, you'll kill a good tree."
Kathwari grew up in Kashmir until age 21 when he decided to move to New York. Yet the influence of his native region and family history, steeped in rich artistic traditions, always remained close to Kathwari and facilitated his first interaction with the company he leads today. While Kathwari was pursuing his MBA and working at the same time at an envelope printing company downtown, his grandfather sent him wicker baskets full of Kashmiri arts and crafts, telling his grandson to sell them to American companies. A fateful directive indeed: one of the young entrepreneur's first clients was Ethan Allen. Soon, Kathwari entered into a joint venture with the company and in 1980 joined full-time, before taking the helm as Chairman and CEO in 1988.
Over the past decades of running Ethan Allen, Kathwari has always relied on ten leadership principles that he crafted – such as working hard, prioritizing and playing fairly – most of which were based on formative experiences during his youth back in Kashmir. "As captain of my cricket team, I learned very early on that as a leader, you are always in the game alongside your team," he says. "You're either playing or you're practicing, but you're always part of the team."
"In Kashmir, I also always hiked a lot," Kathwari continues. "The mountain is a great teacher, because when you're on your way up but going too quickly or climbing too high, you can run into problems and even get water in your lungs. The mountain thus teaches you to pace yourself and that there is nothing wrong with coming down and then trying again.
Abiding by his own leadership principles, Kathwari has steered Ethan Allen through the financial crisis as well as the current market softness, which he doesn't deem to be long-term. "The high probability of slow economic growth for the next few years and tremendous uncertainty about the political landscape has created concerns in the market," he says. "But I don't think that a double-dip recession will occur. Most enterprises are operating efficiently and many weak enterprises have already gone out of business."
The CEO argues that recessions and crises such as this last one can also provide tremendous opportunity for prudent firms that allocate their resources correctly. "Ethan Allen has made more changes over the last three years than we could have made in seven or ten years in better economic circumstances," he says. "The main reason for this was that the concepts of change and innovation have always been firmly rooted in our culture at Ethan Allen. So, we're much stronger today than we were three years back."
A strong financial performance underlines the company's success story. "In our fiscal year ended June 30, we had a 15 percent increase in sales and also a decent increase in profitability," Kathwari notes. "In a down economy, building market share is critical and we did that by focusing on our relevance. Over the last few years most enterprises, nations and individuals were confronted with this issue of remaining relevant. So, after the Great Recession of late 2008 and 2009, we prioritized and have been working very hard to make ourselves highly relevant."
Kathwari focused all aspects of the business specifically around five areas of relevance. "First, we focused on making our products more relevant to our customers," he says. "By mid-2012, over 60 percent of our offerings will be new. In addition, we now provide five lifestyles representing the diversity of ideas that have come to the melting pot that is the United States. Next, we turned to our message. In this age of mediocrity and sameness, we differentiated ourselves by providing our customers with great style, quality and service at the best possible value. All of these factors combined represent the core of our brand message: aspirational and attainable."