Personal finance and KiwiSaver columnist at the NZ Herald

Executive Success: Adding technology not enough

If your business is more than a few years old, it’s probably obsolete, argues veteran manager.
Technology is re-defining markets and customer needs, says Stefan Preston. Photo / Greg Bowker
Technology is re-defining markets and customer needs, says Stefan Preston. Photo / Greg Bowker

Stefan Preston knows the highs and lows of business.

His record ranges from taking Bendon to international success, to tasting failure with New Zealand's supposed answer to Amazon, Flying Pig.

But he says the business challenges he is "experimenting" with right now are among the toughest in his career.

Though he is working on a diverse range of businesses, Preston, who with wife Leslie runs investment company and consultancy Ingenio, says a common thread runs through them all.

The massive transformation in the tools now available for business has made every business designed more than five or 10 years ago obsolete, he says.

"How do you address that problem when the people who run those companies are really just used to running the companies they run?" asks the 52-year-old Preston.

"Even if you apply technology to the existing business, there's just no chance that it will succeed.

"It's like having a big strategy session for a video rental store - it's ridiculous to have a strategy for a video rental store isn't it?

"You can see that now, but in fact most businesses are video rental stores.

"They are all having these strategy sessions about 'how can we stop our declining sales?' It's a ridiculous conversation but not everyone can see it yet." Unpicking the impact this new environment will have on businesses takes a different perspective from what is taught at business school, he says.

"In business school they tell you to consider the market, figure out what your market position is, understand what the customer needs and deliver within that frame." Now, argues Preston, there is no frame, no market definition and customer needs are being completely reshaped because products and services can be delivered in such profoundly different ways.

Add business models that need to change from a sales-driven approach to one that markets through digital channels, or the need to meld digital and physical channels, and everything becomes incredibly complex.

Preston gets to experience these problems with the companies he has helped build from the ground up, including lingerie business Rose & Thorne and holiday home management company Bachcare.

Rose & Thorne, which he co-founded five years ago with the Bendon design team, who were out of work when head office moved to Australia, is up against competitors who are big on scale but low on innovation in a zero-growth market.

Addressing the fact that most women are uncomfortable in their bras gave rise to a range of designs aimed at getting the fit just right. But design is only part of the solution when your customer base openly admits to loathing the process of trying on underwear, he says.

This "conversion gap" has been a huge barrier to Rose & Thorne, says Preston, and finding a solution is proving hard.

This week the company soft-launched an online tool that aims to match women to its products in the privacy of their own homes, using self-analysis of their current most comfortable bra rather than a tape measure. "It's digitising the bra guru experience we've been doing organically for quite a while."

Counterbalancing work at the coalface of high-growth businesses are roles advising corporates with deep-seated business problems.

"When you're already successful, making lots of money, it's incredibly difficult to gain the sort of burning platform that's necessary to actually address that with vigour, but I find that I'm involved with other directors who actually bleed trying to get smaller businesses to grow and actually understand the intrinsics of that.

"It's a combination between getting the theoretical framework that allows you to understand all the issues in a profound sense but also the blood that you expend trying to do things in the real world, because half of business is just about sweat, it's about just doing shit."

Preston, who also has directorships with award winning tourist photo service Magic Memories and retail chain Carpet Court, says he takes a portfolio approach in deciding where to direct his energy.

"I've got to balance my portfolio and then I think about the quality of the people I'm going to be working with and the excitement and thrill of the problem.

"If it's an intellectually stimulating problem and really, really difficult then I love working on it, as frustrating as that can be." That's not to say every proposition has been a winner, and Preston admits he has a problem with over-reaching himself.

"You think you can do everything and it's bullshit - gravity applies."

While his two children were young, business interests were kept within New Zealand, but now they are on the cusp of adulthood, there is a bit more freedom to focus on business growth beyond this country. "We have been very committed parents to our children," says Preston.

"When I left Bendon I basically focused onshore and the reason for that is we spent a lot of time with our kids and gave them the time that they needed rather than the time that we could give them.

"Now they're amazing and super-successful kids and I think that's because we put some effort into them."

- NZ Herald

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