Shoe making was the major industry in Northampton England throughout the 17th, 18th and 19th Centuries. The decline began in the last quarter of the 20th Century when foreign competition and currency pressures forced many factories to close unless they retooled for niche markets, such as fetish footwear.
Unless you’ve been outside the country throughout 2013, you’ve probably heard of Kinky Boots – the Tony Award-winning Broadway musical written by Harvey Fierstein and composed by Cyndi Lauper.
Based on a true story, Kinky Boots is the turnaround story of a distressed shoe manufacturer, Price and Sons, being driven out of business by the exchange rate and cheap foreign imports. Price and Sons’ owner, Charlie Price, having inherited the business (and its problems) from his father, attempts to turn the place around by targeting a “niche market” – high heeled boots for men.
Like any classic turnaround, Price encounters bumps along the way – including a cash flow crisis right before the product launch – and finds a creative solution to each one.
It’s a textbook restructuring – not to mention, a great score and choreography.
For those of us who think we’ve seen it all in restructuring, there were several lessons to be learned from Kinky Boots.
1. A restructuring cannot succeed without a committed work force. In the show, the creative solution to the cash flow crisis comes not from management, but from the manufacturing floor. Too often, a restructuring fails because management is at war with labor, instead of recognizing that there is no turnaround without a devoted workforce.
2. It’s not about what you want to manufacture – it’s about what people want to buy. Price loved making sturdy men’s shoes, but there was no market for them. In order to save his factory, Price found out that “you change the world when you change your mind.” He started listening to what his workers and his customers were saying, and he changed his factory to make something that there was actually a market for. This sounds like such a simple idea, its hard to believe so many failing businesses complete resist it.
3. It takes more than a good idea to turn around a failing business. Identifying the niche market for ‘kinky’ boots was the start of Price and Sons’ turnaround, but it could have been the end of it, too. There were many bumps along the way. The execution of the idea was much harder than it looked. Production, pricing, marketing, financing, dealing with vendors and customers – all complications encountered by Price and Sons.
4. Be wary of your sources of capital. Watch your balance sheet. Sources have reported that the real factory that was the inspiration for Price and Sons, eventually went out of business, presumably due to over leverage and control by outside investors. As the former owner says: “We were unfortunately let down by an American firm who dumped a big debt on us. We had to make the decision to stop production.”
5. Every turnaround needs great choreography. Anyone familiar with Broadway choreography would quickly agree that a typical business plan looks vague by comparison. In actual choreography, moves and steps are mapped out to music in excruciating detail. While there is always a place for spontaneity in any creative process, creative spontaneity is fostered by work and planning.
For more details about Price and Sons’ revitalization and turnaround, here are some pertinent links: