Bold decision making: Lessons in transformation
Bremworth has boldly shifted from synthetic carpets to a mission of revitalising New Zealand wool.
Te Hono spoke with Chair John Rae (Bootcamp VII) and CEO Greg Smith about the transformative mindset driving the company’s decision making.
Aotearoa New Zealand is a country famed, more than any other, for its sheep population. In the peak of the 1980s, we had 22 sheep for every person. These days, the ratio of sheep to humans has dropped to five to one and with it, the price of wool. The decline is down to a range of factors, including a marked consumer shift from wool to synthetic materials.
The numbers don’t make any sense to John Rae. As an experienced director specialising in governance of organisations facing disruption, he knew that New Zealand wool would have its day again.
Sheep to synthetics – the paradox
“In the carpet business, there was a swing towards synthetic products in the early 2000s. They were considered superior to wool, for all the wrong reasons. We just need to stop and think about that for a moment. Somehow, there was a belief that using plastic, which is generally a product of the petroleum refining industry, is more sustainable than farming wool from sheep grazing on grassy hills.”
“Unfortunately, all synthetic carpet fibres are essentially plastic. In 2019 over 17,000 tonnes of synthetic carpet yarn was imported into New Zealand,” he says.
At the time, synthetic carpets made up more than 30% of Bremworth’s sales revenue. John and the Bremworth board recognised that it was time for the company to consider a significant transformation.
“With this in mind, the then CEO and I joined Te Hono’s 2019 Stanford bootcamp, and we were honoured to be given a platform to share the case study of Bremworth’s proposed shift to a full wool model. We expected people to say we were crazy, but the Te Hono community proved to be a bit of an epiphany. Everyone agreed that instead of waiting for change to happen, businesses needed to have the courage to embrace the possibilities it presents,” John says.
“We came back to New Zealand with the realisation that we wouldn’t be seen as a pariah for dropping 50% of our sales volume. Talking with CEOs in other sectors encouraged us to be brave, and we came away with a lot of positivity.
“After that, the consensus was that it was a risk worth taking, and that actually there wasn’t as much to lose as we originally thought there was. In Europe and America, it was already all about natural fibres and natural products, and planet, people.
“We recognised that we were on the crest of a seachange in consumer sentiment where natural fibres and materials, and the substance behind them, were being demanded by discerning consumers. Something had to give, and so we set about turning the ship,” says John.
Overcoming ‘educated incapacity’
Bremworth at the time was predominantly a manufacturing company. The Te Hono experience emphasised that to effectively transform, they needed to enact change throughout the business.
Greg Smith was appointed as Chief Executive after the company’s shift to 100% wool and natural fibres. The former leader of iconic New Zealand brand Icebreaker was already a self-described wool evangelist.
“For me, it’s not about selling wool carpets and rugs. The purpose is far greater than that, challenging the establishment by providing people with a natural alternative to synthetics, and by doing that, supporting farmers,” he says.
However, the process of change threw up a number of challenges.
“We had always done things one way, and it was what our people knew. It’s the trap of educated incapacity, because while expertise and knowledge about your business are crucial, it is important not to let that knowledge paralyse you from enacting meaningful change. Leaders in New Zealand tend to be deep and narrow, which can make it harder to consider what disruption might look like.
“It’s very hard to walk away from more than 30% of your sales revenue. The board had already embraced the change, because being proactive is crucial if you sense a shift coming,” says Greg.
What started off as a structured, five-year plan began to evolve as Bremworth realised the importance of building in room for at least one significant pivot in the business plan each year. By being adaptable and reflective, the company responds to shifts and seizes opportunities as they arise, using a Plan, Do, Reflect, and Repeat’ strategy to continually refine its approach.
John agrees that nimbleness is key.
“You need to ensure the business is resourced for this level of change, and that the culture suits the transformation. This takes a strategic, visionary leader, someone who can hold firm and keep the ship on course, while being agile enough to adapt as the landscape adjusts,” he says.
Transformation also requires continued support of the management team through the ups and downs of this period of change.
“When leaders make a brave call, it’s easy to say that’s it, we’ve done our job. It’s much harder to be brave and then continue to be brave. Keeping the foot on the pedal can be hard for boards, as the gatekeepers of risk taking, but it is needed more then than ever,” he says.
Towards a sustainable future
In May 2021, Bremworth celebrated its last ever synthetic carpet production, reducing its annual plastic consumption by about 2,500 tonnes. However, despite the significant move, Greg says the silence in the market is deafening.
“Apparently, the burning platform isn’t yet hot enough. The synthetic carpet industry is powerful, and they tell a convincing story. Even here in New Zealand, sometimes the farmers who grow wool don’t understand that they should probably be buying wool carpet for their homes. People want to save the planet, but only when it suits.
“Government contracts are installing synthetic carpet tiles in schools; people are still not making the connection that synthetic fibres are essentially plastic, and unfortunately plastic is often derived from fossil fuels and does not readily decompose at end of life.”
The realisation that the story needs to be better told may well shape Bremworth’s future.
“At the end of 2021, we launched our new consumer-led brand positioning which was the start of another monumental shift for our company. This is an important part of our transition from being manufacturing-led to a company that holds the consumer at the centre of our decision making.
“Our governance approach is to stay the course and build momentum during this transformation journey. There are no rules, and by remaining persistent, you create the opportunity for progress and success,” says John.
“Back in 2021, we just knew that we needed to make change happen, for all the right reasons. If you see a macroenvironmental shift coming for your business, such as our board did with the growing consumer desire for natural carpets, you need to move now, because it will happen faster than you think. Chances are, others have seen that change coming too, and they are lining up to take your business from you.”
Greg is increasingly passionate about the opportunities for wool, both in New Zealand and internationally, and says that Bremworth remains committed to shaping a better tomorrow.
“We can reach consumers with this beautiful alternative to the paradigm of synthetics, and a more natural way of living. And so for us, it’s about going global, being bolder, and transforming to help influence an entire industry. The benefit to New Zealand, and especially for rural communities in New Zealand, will be dramatic, and we’re committed to that for the future."