We want to participate in India’s growth story: David Kohler
President and CEO of Kohler Co., David Kohler, on his firm’s performance in India in the last decade, its future plans for the market and its emphasis on art
New Delhi: The Kohler story, according to company lore, started with Austrian immigrant John Michael Kohler when he purchased a foundry in a corner of rural Wisconsin back in 1873. About a decade later, Kohler created a “horse trough/hog scalder”, which “when furnished with four legs will serve as a bathtub”. It is said that John sold this to a farmer for a cow and some chicken. That humble bathtub then underwent countless transformations and Kohler, the company, went on to rake in billions.
Kohler, which makes kitchen and bath accessories as well as power generation systems, also owns golf resorts such as St Andrews in Scotland. The privately-held, family-owned firm is worth more than $6 billion and employs 35,000 people across the world. It is currently headed by David Kohler, a fourth-generation family member.
David, 51, has spent more than 26 years in the firm, working under his father for most of his career. “Nobody has influenced my work-life like my father has; we are very similar in many respects but yet we are a lot different stylistically,” he says. “I think I had the incredible opportunity to learn from an exceptional business leader and so, on most decisions, we land on the same page.”
After graduating from Duke University with a bachelor’s in political science in 1988, David joined the family business, working in every manufacturing division on the front lines. He earned an MBA degree from the Kellogg School of Management at Northwestern University in 1992. After working briefly at Dayton-Hudson Corp., he came back to Kohler in 1993 as director of fixtures marketing for its North American plumbing business and rose through the ranks to become chief executive in 2015. He was in India earlier this month for the 5th edition of Kohler Bold Art Exhibition in Delhi and spoke about the importance of the Indian market in Kohler’s global portfolio and the importance of art for the company. Edited excerpts from an interview:
How important is art for Kohler?
If you look at our strategy as a company it is about design leadership, living at the edge of design and technology. As a company, we have always felt very strongly about arts. In 1974, we started an arts in industry programme for which we would invite artists to our factory and create art. More than 500 artists have since come to our factories, created art and then taken the artworks to show or sell at various exhibitions.
Over the years, it has become a platform for budding artists to showcase their work around the world and has helped us launch products in the Artist edition, which features some of the most exquisitely designed pieces, such as Kamala (a vessel-style sink, inspired by the South-East Asian rain drums) and Marrakesh (an under-mount bathroom sink inspired by the city of Morocco) among others.
What are the highlights of this edition of Kohler Bold Art Nights?
PechaKucha is an initiative by our Indian team and it was conceptualized as a way to build relationships with architects, designers and artists; it is a platform for some of the leading architects to talk on the themes of art and design. This year, the topic is Beauty Lies in Imperfection and we have tied up with Art and Found, which is bringing together works of eight artists. We are using it as an inspiration for our own creative team; we want the architects to be inspired by other art forms.
Also on display will be some of the works of the late Hema Upadhyay, who was also one of the speakers at the inaugural event in 2013.
When you get the reins of a family business that is over a century old and worth billions of dollars, what is the kind of pressure to continue that legacy and be successful?
Well, first of all, it is a matter of great honour and privilege to just be a part of the company, let alone lead it. The company has been built over almost a century-and-half by men and women, past and present, who have put an incredible amount of sweat, effort and creativity into building it.
With that comes a greater challenge because over the decades, the company has endured a lot and still continued to succeed. We are the leading brand in the US and China, and the No.1 foreign brand in India. We are financially and strategically successful in the markets that we serve. So there is an expectation to continue that record. And, fortunately, we have managed that so far. I have had the benefit to grow with the company, working for my father for most of my career, and working with other incredible leaders and learn along the way. So when I stepped in as the CEO in 2015, yes, it was different but I had already been a key player in building the business in the previous two decades. So it was relatively easier moving around. But to say that I don’t think about the business 24 hours a day would be incorrect. I think about the business and how we can improve the different facets of it all the time.
So this week I have spent in Bengaluru, Mumbai and then Delhi meeting with customers, architects and developers, trying to understand how we can grow further.
Are there any plans to go public?
Not at all. There is no reason to. People go public either because of the necessity—they need the capital to grow—or by choice; if they want to cash out or take money off the table. We never needed that. We have been able to fund all our plans internally; we have got outside debt periodically but we stand here today financially strong and without debt. So there is no need to go public.
Tell us more about your India business. You have been here 11 years now. How has the market changed? What are your future plans for India?
It has changed a lot over the years. When we started researching the market for the first time some 15 years ago, we travelled all over the country looking for opportunities and then decided that the best way forward would be to build our own facilities here. I have to say that the country continues to meet and exceed our expectations.
We have a very strong team in place here which understands the market well. We have invested over $200 million here so far. Our plan going forward is to keep building capabilities; we want to enter new adjacent product categories in time and expand the facilities we are in; continue to expand our distribution and build the brand as the leading luxury brand. And continue to bring new product and technologies that are designed here and across the world to India.
Looking at all the demographic trends and the GDP forecasts, it is clear that India is going to be one of the fastest growing major economies of the world and we think we are positioned well to continue to benefit from that.
Do you have to customize products based on the market?
It depends. We certainly have global products here and then there are products designed specifically for India and manufactured in the country. We saw the design need or functional need in India and have designed some products ground up in India and manufactured them here. Increasingly those will be a more important part of our portfolio here. It also brings the Indian artisanal culture into play. We were looking at some decorative pieces today with jalis and different motifs which would truly Indianize our products.
Are challenges here different from the West?
Absolutely. Different countries, different cultures and different challenges. One of the challenges has been the distribution progress. In the US, for example, we will find distribution partners who will own over a hundred locations and are very interested in expanding geographically. Here, you’ll find entrepreneurs and business partners who would rather stay in a region or a city. So one of the challenges here is to find more partners in each region or locality to build and grow the business.
That apart, the market is dynamic and it takes time to understand it. The customer here is value conscious and demanding. But once you deliver on those fronts, especially the after-sales service which is uniquely important in India, it becomes easier to build brand loyalty.
You have maintained that India is one of your top priorities when it comes to smart/luxury toilets. And it is a country where many people don’t even have access to toilets…
I’d say two things. We are here and we will be participating in the growth. There has been incredible growth in the middle class and the quality of living is improving.
We are manufacturing our products in India for the local market as well as for exports. We employ more than 2,200 people here now so we are helping by reinvesting in this economy.
We also believe in gracious living for all. In India, we currently have a project going on with the Bill and Melinda Gates Foundation which is around a closed-loop toilet system that helps deal with the issue of access to safe sanitation for all and making sure that there is proper sewage treatment in the country. So we have testing units right now in Coimbatore to try and see if there is viability in commercializing such a product, which could help improve the quality of safe sanitation in the country.
We also have a Clarity water filtration project in the product line which we are marketing and distributing, and gifting through NGOs in India to give access to safe drinking water to more people.
How did the slowdown in the housing market impact you?
Well it has created a little more emphasis on the retail and showroom side of the business as the project business slowed in India, China and the US but it also is balancing out, so I would say the slowdown has been positive in creating the urgency to build other parts of the business.
But I think in India with all the reforms such as demonetization, GST (goods and services tax), the real estate reforms taking effect, the real estate and the project business will be looking much brighter in the coming 12-24 months.
Vibrating bathtub, musical shower head, a singing and dancing smart toilet. What’s next for Kohler?
We are never done. There is no finish line. Each of those categories can continue to advance and we are continually looking at development projects and technologies around better performance, better enjoyment, water conservation, etc.
The advancement of electronics and technology with the internet and IoT (Internet of Things) has ensured that the possibilities are endless in terms of what can be done. So yes, we have done all of those things that you mention but the advancement of technology is creating many more opportunities by the minute. So we are looking at all those developments to drive more intelligent products.