United States
Reinvents Itself as a Preferred Brand
Remarks by Farooq Kathwari
Chairman and CEO Ethan Allen Interiors at the Center
for Strategic and International Studies
I want to share
my thoughts on the important issue of the role of
the United States as a respected leader and inspiring
power around the world.
I would like to begin, if I may, by telling you
the story of Ethan Allen, which I see as a useful
metaphor for shedding some light on the topic at
hand. We are celebrating our 75th anniversary this
year, and I have had the privilege of leading the
company for more than twenty years.
When I took the helm, in the mid-1980s, Ethan Allen
had progressed far beyond its simple beginnings
as a furniture manufacturer supplying independent
dealers who operated Ethan Allen stores around the
country. Over the years, Ethan Allen had evolved
into a classic American brand defined by its high-quality
Early American and Colonial furniture designs. It
was well respected and had 90% brand recognition.
However, by the 1980s, people’s tastes had
changed. Colonial and Early American furniture was
no longer the most popular style category in the
country.
Moreover, company leadership was too comfortable,
and vested interests had developed; the US manufacturing
base -- mostly acquired during the Depression years
– was not competitive with growing global
sourcing; the dealer network had stopped growing;
few stores were located in premier locations; and
the company lacked a cohesive internal and external
message. As a result, the company was in desperate
need of reinvention.
The challenge would be to reinvent Ethan Allen without
sacrificing its strong brand attributes of quality
and integrity or its valuable brand recognition.
Clearly, being well-recognized was no longer enough.
We needed to become a preferred or a desirable brand.
Our first challenge was to get the messages across
internally, first, that reinvention was necessary;
and second, that change creates opportunity.
We launched an intensive internal marketing campaign
that advocated taking a fresh look at the issues
and challenging the assumptions of the past. We
created the understanding that generally new ideas
are first rejected, then tolerated, and finally
there is an opportunity for acceptance. We also
emphasized that reinvention is a key to the continued
vitality of any organization. Most of the time,
reinvention takes place unconsciously and passively.
Or it happens consciously and proactively; and that’s
obviously the preferred method.
It was the responsibility of our leadership to reinvent
the corporate culture and establish the new guidelines
under which our enterprise would operate. As you
well know, leaders shape debates and clarify priorities.
If leadership fails to take this opportunity and
responsibility, the vacuum gets filled by people
with louder voices and often with extreme agendas.
Once the internal marketing campaign for reinvention
was underway, we made other changes, namely:
• We established a set of core values to guide
us. We call them our Leadership Principles.
• We developed a strong, diverse leadership
team.
• We molded our business to cater to the needs
of the busy American consumer by becoming a company
that specializes in interior design, not just in
making and selling home furnishings. Our design
centers are staffed by 3,000 professional design
consultants with the design know-how, resources,
and service ethic to help clients make solid and
timely decisions.
• We redesigned our product lines to reflect
the changing tastes of our customers. So, for example,
today you will go to an Ethan Allen design center
and find sleek modern furniture, if you want it,
or Art Déco, or the English Country House
style, and much, much more.
• We consolidated our United States manufacturing
operation to nine strong locations, down from 29.
We also now have manufacturing operations in several
overseas locations. Today 60% of our products are
made in our United States plants.
• We now directly operate 60% of our 300 design
centers through corporate headquarters; the rest
are run by independent dealers.
• We relocated 200 design centers to better
retail sites.
• We maintain strong internal and external
marketing and communications programs. There is
a consistency in our message.
Today I am gratified to say that Ethan Allen as
a brand is not only recognized but also preferred
by our millions of clients in North America and
other countries.
Going forward, I strongly believe that to create
long-term brand preference with our clients, our
own people must continue to feel very good about
our brand. In my view, the development of our ten
Leadership Principles has been integral to our success.
And I believe that our future growth depends in
no small part on continuing to follow these principles.
My inspiration for the Leadership Principles was
twofold: I have long been impressed by the universal
principles of ethics that are part of all religions
of the world and that are also enshrined in the
principles that founded this great country. In college
in Kashmir, I was a political science student and
focused on studying the American Constitution and
history. I was particularly moved by the inspiring
message, “We the people….”
During the last twenty years at Ethan Allen, we
have made a point of discussing our ten Leadership
Principles throughout the year. Periodically, our
senior managers evaluate themselves on their implementation
of the principles. Compensation for senior management
is based on their adherence to these principles.
Today I would like to focus on a handful of these
principles. All ten can be found on our website,
www.ethanallen.com.
First, Justice. Justice is not a word often used
in business. Yet we know that injustice results
in conflicts and lack of motivation, which hinder
growth for an enterprise as well as a nation.
Second, leaders have to set an example by working
hard, innovating, and most important, conducting
themselves with humility. Arrogance is often the
cause of failure in leaders and enterprises. We
must have the self-confidence to empower others
to do their best.
Third, we must understand that change means opportunity
and that it is to be managed, not feared. I lived
in the mountains of Kashmir in my youth, and hiking
is still a hobby of mine. The mountains teach us
that reaching the summit requires an appropriate
pace. Climbing too fast often results in altitude
sickness, which can be fatal. The solution is: If
you climb too high and can’t breathe, come
down a little, stabilize yourself, and then climb
again – or not. Unfortunately, most people
don’t like to accept that they have gone too
far, and do not want to climb down. They end up
with a disaster.
Bottom line: in my experience good governance is
good for profitability. At Ethan Allen, during the
last fifteen years, we have consistently performed
at the highest levels of profitability for our industry
and, in fact, for most industries.
Like Ethan Allen twenty years ago, the United States
today needs, so to speak, to reinvent its brand.
Also, like Ethan Allen, “Brand America,"
in my view, has great attributes to build on. First,
the most inspiring message that America has communicated
during the last two hundred years is that contained
in the Declaration of Independence and the Constitution.
“We the people...” inspired the freedom
and independence movements of the twentieth century.
Our core values of liberty, democracy, freedom of
religion, and separation of Church and State, and
the checks and balances of an independent judiciary
have inspired people everywhere.
• Second, the United States provides unmatched
opportunities for success. With hard work and luck,
one can attain high levels of accomplishment. I,
myself, am but one example of a so-called outsider
who has benefited from American opportunity.
• Third, the United States projects quality.
People come here from the corners of the earth to
pursue higher education, and we have developed and
exported technology all over the world.
• Fourth, the United States is generous. It
has welcomed and absorbed people from all over the
world. America, in total dollar terms, has provided
more foreign assistance than any other nation.
• And, finally, the United States represents,
in its ethnic, racial, and religious diversity,
a microcosm of the world. The United States is the
first globalized state.
During the last few years, however, some of our
policies have created negative perceptions of the
United States in the international community. In
my opinion, to strengthen Brand America, we must
create a strong brand preference internally by improving
many areas of life within our own borders, by taking
the following steps:
• We must reinvigorate our leadership. It
has become all too satisfied with the status quo
and has developed too many vested interests.
• We must reverse the extremely low ratings
of the President, the even lower ratings of the
Congress, and the low opinion Americans hold of
many corporate leaders.
• We must invest in infrastructure, in health
care, in education, and in improving the condition
of people living in poverty.
• We must take steps to help make America
become competitive.
• We must recommit to the core values of the
free society. We must -- and can -- maintain a balance
between our security and our values of fairness
and justice.
In addition, we need to reinvent ourselves abroad
– in ways that build on our core Brand America
strengths:
• We must restore the best American values
in our dealings with the rest of the world. We must
insist on free societies, freedom of speech, rule
of law, and protection of minorities. We must accept
the outcome of local elections. Changing our core
values for short-term perceived gains has a blistering
impact on our credibility both at home and abroad.
• We must create the right expectations. We
are judged by the expectations we create. We need
to convey the message that while we are interested
in helping others, we need to prioritize our efforts.
We cannot be in all places at the same time. We
have to clarify and look after our legitimate interests
• We must have the self-confidence to empower
others to do their best. We should not be arrogant
or unilateral. We must take an active part in international
organizations.
• We must help solve problems and conflicts;
we mustn’t be perceived to create them. We
have a great opportunity to help bring peace and
prosperity to many regions. In my view, our peace-making
potential can be our greatest role in the world,
and the future basis of our ‘public diplomacy’
initiatives.
• Finally, we must be proactive in changing
the perception in the Muslim world, and also to
some extent in the Western countries, that the United
States and the West are in a desperate fight with
the religion of Islam.
It is incumbent upon us to dispel the myths that
destructively feed the perception that the West
is at war with Islam. These myths include:
• The fallacy that Islam is a monolithic religion,
and that almost all Muslims think alike. This a
wrong and dangerous assumption. We must get the
truth out: Muslims are diverse in how they think,
in where they live, and in culture, language, and
ethnicity.
• Another myth is that the Judeo-Christian
and Islamic value systems are violently opposed
to each other. It is important to note that this
belief is erroneously held by vociferous sections
of the Muslim and non-Muslim populations. In fact,
Islam is the third religion following the Abrahamic
tradition.
• Myth Number Three: Extremist violence and
terrorism are mostly directed at the West. The fact
is that countries with Muslim populations are the
primary targets of extremism and violence. All peoples
of the world, regardless of religion, must unite
in partnership to eradicate violence, whatever the
source.
• The final myth I’m going to talk about
today is that the Muslim population in the West
is a security threat. While there are obviously
pockets of extremism, the vast majority of Muslims
are integrated and strongly oppose violence and
extremism in the name of their religion. Integration
in the United States is strong, while the disparities
of economic conditions of many Muslim populations
in Europe has led to concerns of alienation.
In my view, it is extremely important that strong
communication programs be developed to help dispel
these dangerous myths. These myths inhibit and prevent
the development of the strong partnerships we need
in the long-term struggle against violence, terrorism,
extremism, and poverty, and as we seek to address
global environmental issues, as well as the problem
of refugees and internally displaced people. Without
these strong partnerships we will be weaker when
it comes time to assist in the major natural disasters,
like the tsunami or the South Asian earthquakes,
that affect us all.
I believe that despite the current challenges, the
United States is in a unique position to take our
leadership to the next level in world affairs. The
United States not only wields major military and
economic power, but also increasingly reflects the
diversity of the world. We should never forget that
in its diversity
the United States is a microcosm of the world community.
As such, we possess unparalleled resources for leading
the world toward respectful co-existence.
Thank you for the opportunity to share my thoughts
with you today on this important subject
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