In 2018, 22 years after starting Howdens, its founder, Matthew Ingle, retired, capping a tremendous run of value creation under his leadership.
In 1995, selling kitchens trade-only to builders was a new concept. Ingle seized the gap in the market, founding Howdens. The business began with 14 depots and £1m in year-one sales. Today, it is worth £5bln.
In his book “Kitchens, or Sink,” Ingle shares his story.
Before founding Howdens as part of MFI Furniture Group, Ingle worked at Magnet, a family business that went south after a management buyout, resulting in Ingle being let go.
He then met Derek Hunt at MFI, who believed in him and took a chance. Howdens began as a part of MFI.
By 2006, however, the legacy MFI business was in trouble. MFI sold its retail business while retaining Howdens. From then on, Howdens grew, and today trades on the FTSE 100, doing over £2.3 billion in revenue.
Even more interesting than what Howdens became is how it outlasted the Magnet business, which inspired it, and the MFI business, which first took a chance on it.
It wasn't just the company's strategic focus (selling local stock kitchens, trade-only, to builders nationwide at the best local price and with a quality guarantee) that drove its success. Its humanity helped set it apart.
“I set out to make Howdens like home,” said Ingle, “the sort of business our fathers and mothers might have been proud...of…It is my hope that our children and our children’s children might be a part of Howdens too…”
The company's decentralized structure further reinforced this human touch.
Ingle was determined to "avoid...management hierarchies."
He believed, "the business should not offer...opportunities for the corporate mountaineer, as "there would be no great peaks to ascend…"
He "didn’t want some big head office somewhere packed with corporate types making all the decisions and everyone having to refer constantly to them.”
To avoid hierarchies, inefficient bureaucracy, and the associated costs, Ingle placed decision-making power close to the customer, at the depots, with local managers “to avoid all the marzipan layers."
Ingle made the local managers "responsible for their own stock, for recruiting and hiring local staff, for managing their accounts, for doing their own marketing, for laying out the warehouse – for everything."
Concurrent with this local autonomy and decision-making authority, local managers would "receive incentives based on their local profits.”
More specifically, Howdens "developed a Lapeyre-style bonus model," writes Ingle, "in which the manager would receive another 5 percent of the local gross margin, dividend by the number of staff.”
Thank you Jake Thomson, CFA for recommending this fine book.
It offers yet another example of the power of doing business with humanity and leaving decision-making rights as close to the customer as possible.
https://lnkd.in/eDHRZ6ub
Thanks Camille! 💙 😊