ORGANIZATIONAL BEHAVIOR & LEADERSHIP WRITTEN ANALYSIS OF CASE (MARIMEKKO)

Prepared By: Muhammad Mudassar Shahid (ERP ID: 01094)

Instructor: Mr. Nasir Afghan

Institute of Business Administration

October 28, 2013

Course: Organizational Behavior & Leadership

Marimekko - WAC

Marimekko The Beginning

Founded in 1951, Marimekko is a Finnish textile and design company; which started off with women clothes, specifically for Finnish womens taste. Later on they expanded into international markets and expanded their product offering to include home interior textile, mens and childrens designer wear and fashion related accessories including large variety of decorating items. Company started its expansion in international markets in 1956 with Sweden which increased the customer base. Their expansion was slow paced but increased after a huge PR attraction in the media because of Mrs. John F. Kennedy involuntary statement issued in press during her husbands presidential campaign regarding the label; in 1960. For the initial 30 or so years, Marimekko was doing great because the focus on the then owners (Armi Ratia) was more on the design and flexibility of their clothes than on profitability. Designers with non-profitable designs were encouraged to do a better job next time and inventory was usually overstocked to provide highest level of customer satisfaction. This lead to financial crunches for the company and marked the beginning of the decline. After the death of Armi Ratia, her heirs for a few years ran the company, but eventually it was sold out to AMER Group. Under the ownership of the AMER Group, Marimekko suffered huge losses mainly because of the following reasons: There was a series of less profitable years during the last years of Armi Ratia, mainly due to cash flow which was stuck up in the expanded production facilities and the Marimekko village construction. This effect was carried forward to the new owner. The AMER Group was restricting the creativity of the organization and its employees because of a new management system (report based and a multi stepped hierarchical structure). Since there was less focus on creativity which meant that Marimekko may not have been coming up with profitable designs consistently.

Course: Organizational Behavior & Leadership

Marimekko - WAC

The New Marimekko

Kirsti Paakkanen Era (Management Approaches and Philosophies)
Kirsti Paakkanen (KP) took over the company when not only the company was crumbling but also the Finnish economy. KP was a visionary, she was so confident in her vision that she risked all her money and also took a bank loan, just for the sake of resurrecting a dying fashion line. She was an able leader, having successfully operated Womena; her entrepreneurial venture in advertising industry. KP realized that she lacked the proper background knowledge of the company and its operations, placed her confidence in the experienced and loyal people of the company to help her turn the company around. Her leadership style can be described as emotional management. This included all the principles (her self-developed thesis) that have guided her through life, such as emotion, respect, truth, enthusiasm, discipline, rewarding success, community spirit, taking full responsibility and caring about things. She believed in valuing people and their ability, originality, creativity and skills. KP encouraged teamwork which became the most important working method at Marimekko, and it has allowed the joy and even ecstasy of success to be experienced. KP doesnt believe that creativity can be delegated, nor is it generated by planning or organizing. When one says that it is my limit and boundary, I cannot step outside, a strong instinct drive gives the permission and / or order to carry on; which is basic human trait. KP dissolved the hierarchical structure and gave a freedom to work to the employees. At Marimekko, internal communication was promoted since they dont have hierarchy and neither had documented job descriptions. Personnel are given freedom, although with responsibility and with a common aim; to make Marimekko the big name in the industry once again. Not just with the employees, KP also introduced the same freedom with responsibility concept with her designers; most of which were freelance. The financial responsibility (loss or profit) was taken on by the designer. This not only motivated the designers, but also ensured that they will ensure profitable designs. Another motivating factor employed by KP with respect to designers was ensuring they get the due recognition in the market. The company has a high regard for its designers, and they were given freedom and a pleasant working environment, but it also trained them to take current market demands into consideration. She restructured the company into a dynamic matrix structure. She was also a feminist as well, giving the power to women. She had about 90% female workforce which introduced an alternate for the usual men biased silo. KP wanted to make out most out of the Marimekko brand, broadening its horizon by including several brand and line
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Course: Organizational Behavior & Leadership

Marimekko - WAC

extensions, with freely delivered creative design as the focus in all. Her long term vision was to create Marimekko as a global brand, of Finnish origin, and she succeeded is succeeding, by exploiting markets all over the world. KP was a visionary, optimist, patriotic, feminist, and confident, with an anti-bureaucratic mindset and a team building leader having a good internal locus of control.

Marimekko's Turnaround
There were many factors that contributed in the turnaround of Marimekko but the most important one was KP's self-belief. Her internal locus of control helped her overcome all hurdles and turnaround the failing business. She believed that Marimekko have created a very deep impression in consumers mind over the initial 30 years, and its hard that the strong brand affiliation be killed anytime soon. She believed in making the company profitable again based on this strong believe. She repeatedly instilled the same belief to all her organizational and design team, sharing the responsibility and credit with each person associated with the company. Her approach to give freedom and recognition to the designers along with the responsibility of ensuring profitability of their designs was a major factor in her products to be well received by the market. All the managerial and structural changes helped in increasing the role of each individual designer and encouraged them to think out of box and take the best out of the opportunity. Providing amazing work environment, conducting and following design competitions to pick out the best of lot, and increasing dependence on freelance designer to maximize variety and creativity. One of the first steps to reenter the market was introduction of an old design which was quite famous during the early years of the brand leading to the famous "Retro Fashion Movement". KP's vision to lead the company into offering a diversified range of products. This lead Marimekko to start Men's business wear and children's wear lines which leveraged the brand equity established by the women and interior textile product line. It was an intelligent decision even from the brand management point of view and one of its kind idea in those times. The success of this idea further established the fact that the companys core value was creativity.

Course: Organizational Behavior & Leadership

Marimekko - WAC

Culture
The culture of Marimmeko, from its foundation had been very rich and dictinct. Emerging designers were recruited and creative prints were promoted. Instead of following the fashion trend of the fashion capitol of the world (Paris), Finnish originality along with functionality (founders aspiration for making clothes people are comfortable in and have movability) was focused up on. The creative workforce was the key ingredient for the success of the company in the initial 30 years. KP correctly identified this as an indispensable cornerstone of Marimekko, and therefore, provided the best working environment for the designers. Furthermore, KP along made sure that designer were able to complete their creative work, before the product management team intervened and discussed the marketability of their designs.

Freedom
Since the companys founding, Marimekkos one of the core value was freedom of expression which was laid down by the co-founder Armi Ratia. She employed emerging and aspiring designers to produce creative prints for the companys products. She was a risk taker and an entrepreneur and similarly encouraged the entrepreneurial spirits in her employees. Freedom to make decisions was given to the designers to such an extent that they were only asked for the best creative work, irrespective to the profitability of their designs. However, in the long run, that led to financial crunches. Therefore, when KP took over, she although gave the same level of freedom, however, made the designers as economic partners of their designs, making them responsible for the profit / loss made on the sales. Another important step KP took in order to further strengthen this concept was contracting freelance designers so that they feel completely independent while working. KP revitalized the creative spirit, since design was declared main priority. To optimize the creative pool of designers, she also focused more on freelance designers rather than the in-house. These designer were further motivated through tangible (financial incentive such as royalties etc.) and intangible (their name on the tag, pleasant workplace etc.) means.

Task Based Teams

KPs first step after taking over the company was to abolish the hierarchical structure and introduce the teamwork environment. The whole structure of the company was revamped and instead task based teams were introduced. Even these teams were allowed to share ideas in between so as to achieve the organizational goals. The reporting culture introduced by AMER Group was replaced by designer centric culture. Each team was assigned a leader and delegated a task; with clear objectives and responsibility in their minds.

Course: Organizational Behavior & Leadership

Marimekko - WAC

No Specific Job Descriptions

Since KP employed tasks based team structure, the enforcement of specific job descriptions was also discouraged and so was and defined organizational chart. This lead to the employees acknowledge a sense of ownership of the company. Every employee was encouraged to pool in ideas in cross functional area. KP specifically told her employees that this pooling of ideas was key to rebuild Marimekko, since she herself didnt had the required experience of the company, however, the employees did. Employees worked on a several projects under one project leader and most efforts were company level goal-driven.

Profit sharing
KP introduced a very effective yet generous way of compensation policy with her designers. The designers were made partners and were shared with the profit made of the sale of their designs. Not just that, they were also incentivized using the royalties policy for future sales of their designs. This resulted in a vested interest of the designers into making the most creative pieces of art so that benefit could be maximized. Not just the business profit, the economic profits of getting recognized and being able to build their independent brand equity was also available. Incentives like these lead to greater interest of the designers.

Feminism
From the very beginning of her career KP had a strong belief regarding women being able to outshine men without their support. She was a sting feminist. Her first entrepreneurial venture Womena, was based on this belief of hers; as she had only females working for her. After taking over Marimekko, she again employed the same strategy, and thus the ratio of 9:1 women for the workforce was overwhelming. Although this strategy has its advantages, such as women are more inspired by the fashion trends and women fashion have more diversity, however, since the company had been expanding into children and men clothing also, it is highly likely that they will face huge challenges in future. Research also suggests that the thinking process of men and women is different and Marimekko may miss out important ideas men might be able to stir up. Furthermore, they are deliberately hiding themselves from almost half of consumer base.

Going Global Possible Strategies

Disparity of Gender: With the expansion of the business, especially into men clothing, the gender disparity that currently prevails in the company should be abolished. Since the thought process of men and women are different; global companies need diversified workforce in order to sustain in the global competitive environment. KPs belief on anchoring the feminist block should be marginalized if not much to at least 5:1 ratio in favor of women. This way the belief of KP empowering women will not be overruled;
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Course: Organizational Behavior & Leadership

Marimekko - WAC

but will allow men to participate in the overall thinking process and improve the creative and intellectual synergy of the company. Going Glocal: A key concept coined by international marketers for companies going global is glocal. It suggests that the companies going global have a huge challenge to overcome social and cultural barrier of the new avenues. To go global Marimekko will have to be extremely aware of the changing culture continuum that they will face across international borders. Markets in which they are expanding currently such as Middle East, they might face a huge cultural challenge on implementation of Marimekko concept outlets. Therefore, they should consider customizing it according the the local culture. Similarly, the cultural differences can be used by the comapny as an opportunity to introduce new brand and line extensions. Development of Franchises and Offshoring: Franchising is one window that Marimekko should look into for expansion. Similarly, off shoring options should also be looked into to cut costs down especially for the eastern markets, which will help them reduce the lead time of distribution; since one of the reasons not to utilize offshore production facilities outside EU was lead time. This will provide quick supply to concept stores abroad, and be the path to added brand value building as an international corporate.