A lean machine with a difference

Succession is a basic problem in family businesses, as in Modular when it started. Father starts a business but none of the children want to carry on with it. In 2004 the company was sold. Spurred on by new shareholders the growth of the company was stimulated significantly.  The objective was the following: produce more intelligently, be innovative and expand internationally.  In 2006 Modular was sold again, this time to Philips, which decided to retain the image, name and unique character of Modular within the acquisition. ‘Modular is the only architectural brand that Philips has,’ says Messiaen. ‘Authenticity is very important in that niche.’

Four pillars

Modular’s strategy which - according to CEO Lieven Messiaen - enabled the company to double its turnover from 20 million to 40 million in just four years, rests on four pillars: internationalisation, innovation, production and networking. ‘International growth is expressed on two fronts,’ says Messiaen. ‘On the one hand three international branches have opened, in addition to the parent company in Belgium. There are fifteen employees in the Netherlands, about ten in France and ten or so in Sweden. In addition, there are numerous independent dealers who also contribute significantly to the growth figure. Those are precisely the dealers who suffered most because of the crisis. In Spain one dealer had to let forty-five of his sixty employees go because of the weak market. Not very easy for him, but the company also felt this setback in its overall figures. By means of innovation we must continually surprise our VICs (very important clients). Of course the design of our products is crucial, but the technology must follow suit. Our clients set high demands and expect us not to follow trends but to launch them.’

Lean machine

Lean Manufacturing, a management philosophy aimed at cutting back, is popular with many manufacturing companies, also at Modular. Messiaen: ‘You can get fifteen per cent more profit by producing differently. Avoiding waste doesn’t only relate to surplus material but is also about limiting working hours and actions to be carried out. A production process starts at the product launch. The chain which you set up – receiving material, actual production and packaging and shipping – may no longer be seamless if any one factor inside it changes. Yet we try and squeeze production in that line. An audit provides insight into producing more smartly. One often refers to networks in terms of social or interpersonal media,’ says Messiaen. ‘Technological networking is also important. The takeover by Philips can be seen in that context.’

People

There can be no growing business without having the right people in the right places. ‘This is very important,’ says Messiaen. ‘In addition you must always invest in the training of your people. The average age of our employees is thirty-one, in other words, people at the peak of their development. We always talk about entrepreneurship in Belgium, but is that still important? Flanders, Belgium, Europe, in the end it’s about individuals who are really passionate about achieving what they believe in. When such inspiration is supported, entrepreneurship will follow automatically. That is why it’s so important to believe in people and allow them the freedom to be themselves. When your company gets bigger, you naturally have to create structures and introduce procedures. Structures and procedures are necessary, but when passion flares up it can’t be controlled by a few rules.’

Leadership

Not every CEO has the same free-thinking approach as the eccentric Lieven Messiaen. Everything in the company exudes his vision of life and of the economy. The in-house magazine, which appears twice a year, features a report on night life, including a visit to the red-light district. The toilets are decorated with black-and-white images of naked people. Product designers skateboard around the grounds during their lunch break. ‘If you’re a rebel, you also stir up that bit of rebelliousness in your people. You need that special something to rise above the lethargy that comes with routine, although you won’t hear me saying that discipline isn’t necessary.’

Fixing the system

‘The European way of thinking must change,’ according to Messiaen. ‘Government must offer more incentives to stimulate green thinking. Take energy saving: many companies have some way to go, but do they get enough government support? Here I am thinking not only of money but also about clear regulation. For electricity companies the biggest profits still come from nuclear energy. Naturally they lobby government. You need some political courage to clean up this state of affairs. Another phenomenon is the tendering process. Seven in ten companies serve their customers via call centres based in India. This could not happen unless government encouraged it. Government has an important role to play when it comes to stimulating entrepreneurship.’

Golden advice

These are no easy times for starting a business. Those who do want to launch a business under these difficult conditions could use the advice of a successful entrepreneur.

- Be different from others without losing sight of the fact that you’ll have to fight for it.

- Do you want to be a follower? Second best? Then you‘ll have to become first class in terms of price.

- Don’t become second best! Prove that you can be different from others, so listen to your customers’ demands, stay close to the market, provide top quality, be innovative and don’t settle for less than the complete confidence of your customers.