Saturday, June 05, 2010

Sun Tzu - War On Business Part 7 (Zak Surfboards)

Part 7 of this series is an interesting one, as it focuses on a sport which is not very familiar to me and can be considered “niche”. This sport is surfing and the business in question is one of selling surfboards in Melbourne, Australia. The business is owned by a guy called Zak Koniaris (“Zak”), who is an avid surfer himself. His shop sells everything surfing related, from the surfboards itself to the associated paraphernalia. The shop also repairs and “enhances” surfboards, so it provides such value-added services to customers too.

Zak is interested in expanding his business but he does not really know how to go about it. He maintains that if the business falls apart, he will go look for a “real” job. He was asking James to help him on certain areas, specifically on systems, strategy and “what’s next” in terms of moving up the value chain. James did a simple test to find out the value of Zak’s brand, by visiting a nearby town called Thorngrey and if the people in that town had heard of Zak. It would seem he has a somewhat loyal following in this small town, with people mentioning good things about him and his surfboards. Considering he shapes his own brand of surfboards (branded “Zak”) and also provides advice on surfing and other repair services, I would say Zak’s store can be considered a one-stop shop for surfing enthusiasts.

There are a few competitors in the region, namely Surf City and Ripcurl; but since surfing is an intensely personal sport, it was possible for Zak to build up a loyal base of “fans” in spite of the competition around him. Michael Van Der Klooster gives his opinion on Zak’s surfboards, saying that it is a great brand but that Zak will need to create more awareness in order to further boost sales. James Sun highlighted that a very famous surfboard maker, Maurice Cole, had exactly the characteristics which Zak would like to emulate and learn from – a high profile clientele base, high quality products and unique designs. Thus, Zak needs to start planning his strategy, as simple questions posed to Zak from James shows that he doesn’t even know the exact value of his inventory! He is a boss who gets along well with his employees but has no idea of the margins or revenues, and this cannot go on if the business is to expand and grow. (A consultant Matt Rockman, was brought in to observe Zak’s business, and commented that there was no proper strategy in place, with the shop feeling “congested” and stock lying around “everywhere”).

In the War Room, James then advises Zak to form a partnership with Maurice Cole, and to learn from him in how to organize and market his business. Zak took up the challenge and engaged a business consultant to come in and help. Firstly, the inventory was keyed into a computer system to better track and manage, and there was also a written P&P (Policies and Procedures) manual to elucidate all systems, so that the whole organization was more formalized. Zak’s best friend, Tim, helped to price-tag all items and now all inventory is segregated neatly on the shop floor (with some hung up on hooks for better display). Inventory is all properly labelled and the staff are now no longer confused as to which surfboard to repair, as tracing can also be done through the computer system.

To sum up the episode, James Sun mentions one of Sun Tzu’s teachings: “The Good General Cultivates His Resources”. Zak had the resources, talent and tenacity to grow his business, and the partnership with Maurice Cole can only mean positive news as he learns more on how to develop his business into a professional outfit in order to attract a wider base of customers (the more well-heeled, the better!).

The lessons to learn from this interesting episode include:-

1) Ensure adequate brand awareness – Brand awareness was not high on the list of Zak’s customers, as only a few towns knew of his products and the reputation he had built up. Zak’s products were of good quality and innovative, but the marketing was insufficient to extend brand awareness to the next level (i.e. throughout Australia).

2) Formal systems must be in place – Witness the confusion and disorganized arrangement of Zak’s shop before the changes took place, and one can immediately see how much more efficient and effective it becomes to get things done! Employees also feel less frustrated and have higher morale at work as a result of the better systems in place.

3) A leader must understand his business well – Zak’s lack of coherent knowledge about the intricacies of his own business was a major deterrent in getting the business to expand and grow. He managed the business more as a surfing enthusiast, rather than a true businessman. That was actually well and good if he just expected to subsist, but to enable growth to be achieved, he needed to have the key info at his fingertips.

4) Importance of Arrangement of Inventories – This is one rule which I learnt in marketing, and it’s that inventory, when arranged optimally, can enable customers to quickly zoom in on products which they are looking for an reduce the hassle and frustration of shoppers. Some examples are supermarkets which display popular brands at eye level or department stores which tend to carry a wider range of items from popular brands, or to put higher margin items at the forefront. Zak needed to rearrange his inventory so that customers knew where to find the goods, and this would encourage repeat patronage (a neat store is always preferred to one with a messy, cluttered layout).

5) Exploring partnerships – Sometimes, it may be a good idea to explore partnering with either suppliers (to improve supply chain management) or competitors (to establish synergy and work together instead of against each other). As can be seen from the episode, Zak partnering with Maurice was a win-win situation as Zak’s innovation would be useful to Maurice, while Maurice has worked with high profile clients and knows what it takes to build an international brand name.

Watch out for next week’s episode 8 on Skoda Cars in Singapore!

Have a visit at Zak’s Surfboard’s website at

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