'Just responding to the competition is not enough. We have to bear in mind all the time that we need to keep our business growing," says Pisith Patamasatayasonthi, the president and chief executive of Index Living Mall Co Ltd. "Since Index was established in 1973, I have tried to expand the business in different aspects in order to grow and be competitive at all times."
Pisith: Managing people is key
A modest and soft-spoken executive, Mr Pisith says he learned the value of constantly seeking new ideas through his own work experience, especially when dealing with foreign customers.
"I came from a small family retail business upcountry," he says. "My first product was a folding chair. Although I'm not a carpenter myself, I was able to manage and work through my people, who were experienced chair makers.
"At this very early stage of my own business, I saw clearly that the rule of management _ whether one is a small retailer or a chair maker _ is the same, which is effective management of people. However, managing through people is not as easy as it seems to be."
As his early products started to find buyers, Mr Pisith looked for ways to branch out. "Over time, based on our collective experience in both production and management, we moved into steel furniture production such as tables, bedroom furniture and so on. Working through a Singaporean importer, we also started an export business, which supported our growth strategy."
Strategic shift: Apart from his busy life as chairman of the Index Group, Mr Pisith has contributed his time and expertise as president of the Thai Furniture Industries Association for more than 10 years. Drawing on knowledge sharing and frequent trips abroad, especially to China, he has visualised what needs to be done to keep his business competitive in the long term.
"It is not possible for Thai furniture manufacturers to compete successfully as original-equipment manufacturers in the global market with competitive prices," he says bluntly. "From the base of 10,000 Thai furniture factories _ compared with 30,000 manufacturers in China _ no more than 20 factories are capable of exporting.
"Structurally speaking, we have problems with raw material supplies. Our only advantage is an abundant supply of natural rubber. Recognising these hard facts, we have changed our revenue structure [at Index] over the years from 70% export business to less than 5% at this point."
Modern furniture retailing: A true entrepreneur, Mr Pisith arrived at a breakthrough decision that would clearly differentiate Index from other industry players. Partly because he saw a poor long-term outlook for exports, he ventured into a different area even though it appeared at odds with what management textbooks might advise _ he started his own retail business 14 years ago.
"It's not only because we have to move forward and prepare ourselves for competition all the time. We must keep running without stopping or even pausing," he says. "It's like running a 100-metre competition pace for a marathon length. Starting our own Index Living Mall was one of the answers for our long-term growth strategy."
Retailing is risky, and Mr Pisith made the smart move of advancing one step at a time. First, he made a deal with a provincial retailer and wholesaler to provide an exclusive space to display Index products. Over time, this approach built brand recognition and helped to support the creation of exclusive stores under the Index banner.
"We decided to run our own retail channel because we would not only have more and more difficulty with the exporting business but also have faced higher rental costs in shopping malls, where rents keep increasing year after year. In addition, a middleman requires a higher profit margin and will display only fast-moving items."
Leading with trust: The Index Group's revenue reached 8.8 billion baht last year, and it employs 6,000 people. In addition to its flagship Index Furniture brand, it is known for Trend Design, Winner, Logica office furniture and others.
"Currently, we have 19 Index Living Malls, which sell basically decorative items including our own house brand items," he says. "Within the next two years, we look forward to boosting our retail business through franchisers within the region such as in Asean and Middle East countries."
To oversee a large and growing business, a leader must budget his time carefully and make sure he has the right people in the right positions. After all, no one expects the chairman of such a big business to make the chairs himself. Mr Pisith has never been a carpenter, and he only visits a factory about once a month.
"Trust is a key element of leadership quality. We should trust our team members for their honesty and be able to let them trust us as well," he says. "There's no need to visit the production site frequently since we already delegate work and responsibility to the executives.
"However, we also have to send a clear message that we will not compromise or stand for any wrongdoing such as fraud or corruption. If that happens, immediate corrective action must be taken."
Culture cannot be built: "I believe culture cannot be built," he continues. "It is the way people behave around the workplace. It's the collective attitude of people in the organisation. We cannot force them to do as we want unless they choose how to behave on their own. Blending new and old employees is always a challenge in any organisation including ours. Corporate culture plays a key role in this area."
A leader, meanwhile, does not need to be good at everything but must have at least a reasonable knowledge of his field to run a business.
"Leaders should ensure they put people into the right work assignments. Hence, leaders should be able to set clear measurements and also have the courage to make decisions," he says.
"By the time the giant global players come to town, we will always be ready for the competition. The question is not 'Will we grow?' but rather 'How high will we grow?' At the end of the day, we obviously have to compete with ourselves and not with others."
Sorayuth Vathanavisuth is a former chief executive of the Thailand Management Association. His areas of interest are leadership development, talent management and executive coaching. He can be reached at sorayuth@sealeadership.com