KENT FOOTWEAR

Back in 1972, Kent Footwear was a small start-up shoe company with an
ambitious goal: to beat the market leader, Harper Shoes. Kent Footwear was a
firm of 48 people. Harper Shoes was 3,000. Kent Footwear’s bold ambitious
powered more than a decade of astonishing growth. As the mass market for
shoes divided into an array of niches, Kent Footwear chose a highly profitable
one: high quality, European-design athletic shoes, made less expensively in
Asian factories. For the 12 years beginning 1972, Kent Footwear grew one
thousand fold, from $1 million to $1 billion in sales by 1983. When growth is
explosive, and follows a straight linear path toward the roof, companies often
begin to lose touch with subtle shifts in the market. With growth so strong, why
should they care if they miss the emergence of a few small niches?

Kent Footwear has learned why. As the company tooled up to meet colossal
market demand, its culture changed, says one top Kent Footwear executive:
“The business got so large and so complex that it was impossible for (cofounder
and CEO) Carl (Knight), or any of us, to play the same role.”

Growth and profits reached record levels. The company looked healthy. But it
was becoming machine-like, blind to changes in the market. When aerobics
entered the picture, and customers began to look for the right footwear, Kent
Footwear was caught off-guard.

But Lamington, another big shoe company, wasn’t. Between 1981 and 1987,
Lamington’s sales grew nearly one thousand fold, mostly at Kent Footwear’s
expense. Lamington’s profits grew high during these years.

“We crashed,” says Nelson Farris, Kent Footwear’s longest-standing employee

besides CEO Carl Knight.

“We had diversified too much, spread ourselves too thin. We took our eyes off
the market, started focusing on ourselves. And we had a loss of leadership. A lot
of our original people cashed out their stock options, moved on. There was
confusion about what we stood for.”

Over time, Kent Footwear regrouped, and responded by seeking to jostle its
machine-style organization awake. To cultivate more of a learning organization, it
decentralized authority, increased diversity, and differentiated its product line.
The shift in management strategy worked. The company also decided to be not
only of service to consumers but also to the environment. Kent Footwear
adopted the slogan “Customer satisfaction while keeping Mother Nature green!”
Within 18 months, Kent Footwear stabilized, and sales began to grow. Between
1993 and 1997, they exploded a second time, this time from $2 billion to $9
billion. Customers were attracted by their new products and their new paradigm
on being environment- friendly.

But this success once again came to a halt. Kent Footwear came face to face
with new issues. One of these is the high material cost. Another is the
controversial use of chromium in the company’s products and their waste
disposal. Lastly, the delivery of products by land is quite costly due to low
capacity of the delivery trucks.

The first issue which is high material cost was lobbied by the new supervisor,
Neil Carmichael. Though the company was earning a high profit, material cost
was high. So, he began observing the little details in the materials used in the
production area. After a week of observation, he was able to gather the following
data:

1. Each piece of shoe was wrapped with plastic 3 times.

2. The inside of the shoe box was filled with lots of paper.
3. After the pairs of shoes were placed inside their boxes, the boxes were
then wrapped with thick paper wrappings. These wrappings were provided
to protect the shoe boxes from deformities it might meet during
transportation or transfer from the delivery truck to the stores.

All these materials were found to be mostly removed and discarded when they
reached the stores.

The second issue faced is the use or chromium and the waste disposal of Kent
Footwear. Chromium is being used by the company in the upper material. Upon
learning of this, certain customers have been calling in the company’s customer
service of this predicament. Also, the company has been faced with the some
(not all) worker’s complaints on the inconsistent waste disposal. Wastes are said
to be deposited in a big bin. Some workers are said to just leave their wastes in
their work areas.

Last issue is the delivery of products. Steve Wallowitz, head man of the
deliveries, admits that the capacity of the delivery trucks is not enough for some
bulk deliveries. When asked about what he thinks could cause this low capacity
of delivery trucks, he had one answer. “I think too much packaging of the
products affects the space they take up in the delivery truck. Excessive
packaging cuts almost in half the quantity of products that could fit in a single
delivery truck.” Sometimes, when demand is high, delivery of products become
costly because more trucks will be used for delivering the products. More trucks
mean more fuel to be used and burned.

Kent Footwear has always advocated customer satisfaction while keeping the
environment green. But in situations like these, what should Kent Footwear do in
order to satisfy both and not compromise anyone along the way?