Doing simple things well

One of Ireland’s great business success stories of the past 50 years has to be a company called Glen Dimplex. The company began life manufacturing oil-filled radiators, in Northern Ireland, with seven employees. 40 years later the company is the a global powerhouse in manufacturing domestic appliances (like kettles and radiators), cooling and ventilation. Glen Dimplex is also a world leader in high tech intelligent electric heating and renewable energy solutions, but at it’s core the business dominates markets where perceived scope for innovation is lost on the masses. How do you make a better kettle? Surely kettle innovation peaked sometime early in the life of Glen Dimplex? I’ve often asked those who might know how a company like this can be so successful. “It’s a big world out there and everybody wants a kettle”. 

Many start-up businesses focus on solving the complex, apparently unobtainable solutions to abstract problems. How else could you have a competitive advantage against the status quo? Many of these start-ups are before their time and never get traction or discover product/ market fit. Often overlooked are the opportunities to do something that already gets done significantly better. Like manufacturing kettles better than anyone else. 

A simple and i think great example of an efficiency improving start-up is Naked Wines. They sell wine. Not new. Their model is different though. They have signed up 200,000 “angels” who commit £20 per month to their wine buying kitty. In return angels get 25-50% off the retail price of wine on every order. The £4m monthly working capital commitment from the angels solves a financing problem, and is invested in independent wine makers who give their wines to Naked at wholesale prices, which they pass back to their angels. The independent wine makers get solid volume order commitments, solving their cash-flow concerns, Naked has negative working capital as they have £4m each month to buy stock with, and the angels benefit from the wholesale prices. The social element to the site makes it feel like a cheap entry wine club. And the wine is good. 

Making better kettles and improving the cash-flow for independent wine makers are not new ideas. They are simple ideas executed to perfection. There will always be a lot of value in that.