THE MANAGEMENT INTERVIEW John Bongard – Straight Talker

There can have been few greater tests of New Zealand business leadership than the extraordinary pressure Fisher & Paykel Appliances managing director John Bongard has been under during the past year.
Yet for this unpretentious 51 year old who joined Fisher & Paykel as purchasing cadet in 1973, 2004/05 was literally “business as usual”, even if more unusual business than most.
“It was the ‘perfect storm’ [from business perspective] but we have sort of philosophy around here that there is no point in us worrying about things we cannot control,” he says.
“Going home and not being able to sleep at night because of commodity prices and exchange rates is not the way to go.”
That Bongard continues to guide the company through the troubled waters of international business when many manufacturers have given up the ghost reflects not only on his ability to shave costs and pick markets but also on the peculiar corporate culture that is Fisher & Paykel.
Strictly speaking, F&P Appliances has no corporate culture, at least not defined one.
“We tried to define the culture of the business but we couldn’t. If you can define it it’s probably not there,” Bongard says. “We developed for our own internal use our company ‘DNA’ and we have worked on that for three or four years.”
Bongard says the company DNA has four ingredients: style, integrity, care and innovation. Unlike long-winded mission statements, which he hates, the DNA is memorable and, to long-time company watchers, accurate.
It perhaps explains why the company holds its own in the competitive New Zealand and Australian markets and is still around after the founders, Sir Woolf Fisher and Maurice Paykel, set up shop in Auckland (initially as importers of American refrigerators) 71 years ago. It is certainly the raison d’être for F&P Appliances’ expansion in the United States.
Even in the days of the New Zealand command economy, when tariffs and import licensing shielded the group from competition, F&P set high standards in product design, manufacturing and service. These were imposed by the founders and extended throughout the group.
If F&P had head start in the New Zealand whiteware market in the “good old days”, it was fair game when the country opened its doors to full-frontal competition in the 1980s. If it had comparative advantage, it was not its longevity but the DNA as defined years later by Bongard and his team.
Since F&P Appliances Holdings came into being in 2001, after F&P Industries was split into separate healthcare and whiteware companies, the pressure to perform against all comers became even greater. The market was impressed with both companies – analysts and shareholders enjoyed the healthy mix of family leadership (Gary Paykel, son of the late Maurice Paykel, chaired both companies) and the discipline that came with industry-specific listed stocks.
But in 2004/05, for F&P Appliances at least, the golden weather was over. On February 2, Bongard presented dismal outlook for the company. He announced to the stock exchange that F&P Appliances was expecting fall in net tax-paid profit of up to 26 percent for the year ended March 31, 2005. The company was being hurt in New Zealand and Australia, especially the latter, by low-cost imports from China and Thailand, and being gouged by galloping commodity prices “at record levels”, fanned in part by extraordinary demand from the overheated Chinese economy. There was also the added problem of the volatile New Zealand dollar exchange rate.
Bongard’s statement ended with the refrain that while the directors expected trading to remain “difficult”, well-advanced initiatives would “underwrite the long-term performance of the company which is based on world-class innovation, technology and cost efficiency”.
In the event, F&P Appliances produced result slightly better than the top end of its February forecast – $68.6 million after tax compared with the previous year’s $85.3 million. The company reported on Budget day, May 19 (by coincidence rather than design) so its success in stemming the bad performance passed largely unnoticed.
In fact, the profit fall aside, the company performed creditably on turnover and market share. It sold 1.3 million units, 70,900 more than the previous year, and its US business boomed, with sales increasing some 70 percent. The performance of the recently acquired Dynamic Cooking Systems (DCS), top American manufacturer of indoor cooking appliances and outdoor grills, helped.
Bongard had pointed to the boom in the US business in his February statement but the outcome was better than most expected.
“It has been tough year,” he told Management magazine recently, “but we came back reasonably strongly in New Zealand and our DCS operations in the States performed better than we anticipated.”
Bongard was not that surprised. “We have got pretty clear strategy. The US is going pretty well. Very soon it will be our number one market for the world.”
That strategy is simple: top brands, high awareness and operating as local in the US market.
The iconoclastic “Kiwi way” that caused so many New Zealand companies to come to grief in Australia and Britain is not part of Bongard’s vocabulary. In America you run business like the Americans and give consumers what they want. The homespun New Zealand “we know best” approach has no place in F&P Appliances’ US retailing strategy.
“We did not try to export the New Zealand way of doing things,” says Bongard. “That is sometimes mistake.”
The dummy run for the US was F&P’s expansion into Australia in 1990 – what Bongard describes as the biggest event of his career. So successful was that that F&P Appliances today is viewed as quasi-Australian company. For America, though, it meant hiring staff from outside the company – move that ran counter to the long-established F&P practice of promoting from within.
“These days we look to employ good people at reasonably senior levels within the group who have not worked for us [previously].”
What Bongard will not warm to is management theory or the use of consultants.
“I am not guilty of that… I have never been great reader of management theory. I got out of that habit when I left university.
“We have never been great on consultants at all. The policy has always been when we run out of ideas for improvement ourselves then we will get advice.”
But whether Bongard follows management theory or not, he is modern manager who works in modern, friendly management environment.
“We try to have quite flat structure. We try to encourage movement between disciplines. We are still very much driven by technical innovation.
“Even though [F&P Appliances] is public company it feels like working in family one.”
Bongard attributes this to the influence of the chairman (until recently executive chairman) Gary Paykel.
“I had pretty good mentor in Gary and he always offered me lot of encouragement and help.”
Bongard admits at times to being “pain in the arse” as chief executive but attributes the success of F&P Appliances to the collective strength of his managers.
“I am reasonably hands-on [but] we are close knit. I don’t have an office. I just sit out here in the open plan. I believe in teamwork. We work together very well.”
Unlike some chief executives, Bongard maintains healthy work-life balance. “Family” heads his non-work activities though he finds time – less time than in the past – for fishing, golf, boating and horseracing (the last hobby through share in horse he owns in syndicate with his work colleagues).
Despite the pressures of his job, Bongard remains the quintessential “Kiwi bloke” – straight talking, down to earth and thoroughly reliable.
If he had pursued teaching career – something his parents wanted – he would long ago have been secondary school principal but, one suspects, not happy one. F&P made John Bongard what he is and he is not going to forget it.

Born: May 28, 1954, Auckland
Educated: Pa

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