A chat about Article 5 of our Manifesto: Today, creating quality products has become democratized and accessible.
Kat: So, article 5 is for those who choose to pursue it, creating quality products has become democratized and accessible across the board. So, this is something that has surprised me! Can you explain a little about how does this change the game and this is actually true?
William: Well, this is actually true. When Steve Jobs came back to Apple as interim CEO in 96/97 what he did is he said we’ve got all these factories that we own are making all these products for us. Our own core competency is not running conveyor belts and factories and production lines. Our own core competence is designing great products, marketing great products and selling those great products.
So what Steve Jobs did is he went to China, and he worked with a company called Foxconn, who today is the largest manufacturer of iPhones. This very contrarious strategy at the time of the industry, experts thought: how could this company in China make products with the same quality? Today, it’s a totally different business. The people that are specialized in manufacturing the best quality products have a totally different skill set and a totally different company culture in the company that is specialized in designing and marketing those products. So, what happened in the last 2 decades, the value network has become modular. This means that you don’t need to be vertically integrated, you don’t need to get into the factory to make the best quality products.
In fact, if you want to make the best quality products, it’s almost becoming a necessity to find those specialized manufacturers. It’s not like Apple can make iPhones in their own factory but they choose not to. They don’t have any expertise, so they go and outsource it to someone who is just specialized in that. Just like how that company does not have the expertise to design and market these great products. They rely on Apple for that. What this means for every category of consumer is that if you want to make great quality products, I can pick up the phone and I can call Foxconn today, the same factory that makes iPhones and we can be right next to them, the same company of the same expertise making products. That applies to every category. 100 years ago if you wanted to make a great product you had to build your own factory. It was a very high capital expenditure and it created barriers to entry so only the rich and well capitalized companies were able to make great quality products.
Kat: You need land, labour, you need everything!
William: You need a lot of capital and a lot of volume as well, because you can’t be launching a new brand you don’t build an enormous production line, hire the best experts and refine the techniques. Now, because its commoditized and modular it means that anyone can plug and play if you want to go for quality and a lot of people want to go for quality. They usually don’t want to go for quality. At Galton Voysey, we always encourage our founders, guys let’s go for the best quality and find the best factory in the world and then we make those products there.
Kat: We’re now able to connect with factories. We were based in HK, so China seems like the obvious one, but we can connect to factories in India, Thailand and Europe.
William: We always look for where we can make these factory products at the highest quality and at a reasonable cost. The quality definitely comes first. Some brands, some of our founders say “Hey, my brand is about making products in this region”, in which we say “That’s awesome!” I think it’s become democratized and if you have the right people you can make the best quality product.