Renowned for its innovative business model, Straight plc has remained a leader in the waste and recycling solutions industry. Founder Jonathan Straight tells Exec Digital how it is coping with the downturn
By Ellie Duncan
“Innovative doesn’t necessarily mean you’re the first to think of the idea but it means you’re the first to successfully capitalise on the idea, or the first to exploit the idea in a market-wide way,” says Jonathan Straight, the charismatic founder and CEOof Straight Plc.
This statement perhaps best sums up the business model on which the company has based its success. Exec Digital last spoke to Straight just under a year ago but since then much has happened to his business and the economy.
So what has been the impact of the recession on the waste and recycling solutions company then? Well, as it happens, very little.
“Because we’d experienced problems in the business in the first half of the year, we made a lot of changes,” he explains. “The interesting thing is, by the time October came around, we’d already addressed a whole raft of issues in our own business, including overheads and operating costs.
“As a consequence, quarter four of last year was very good and that solid performance has actually carried on into 2009.”
Restructuring
The past year has seen a less than attractive performance in Straight’s direct to consumer business which included a mail-order catalogue.
This area of the business underwent some restructuring, on the basis that removing all non-value adding elements would make it more streamlined. The core trade business was also the subject of a strategic review. Having started with 62 employees in January 2008, Straight now employs just 38. Both its call centre and warehouse operations have been outsourced, and the sales and marketing fuctions have been streamlined.
“We’ve got a nice team now, which is able to run the business at its current level,” he admits. “I think we could take the business up another £20 million with only another half a dozen heads here.”
Mr. Straight has been vocal about his belief in the business model that he has adapted since the firm was established in 1993.
“When the business started, I was operating as an agent,” he says. “As the business grew, we became a distributor.
“As the business grew further, we managed to persuade some of our main suppliers to let us use their moulds in factories we nominated, so we became a manufacturer under licence. After we’d floated in 2003, we invested in more of our own tools, and when we bought Blackwall in 2005, that pretty much cemented the situation.”
Unique business model
Today, Straight is a virtual manufacturer in its own right, with its own tools and intellectual property. Alarge part of the company’s success rests with its business model, which allows the business to develop new products constantly.
“The development is done by involving a raft of third parties on a product,” he says. “So basically we pick from a menu of contacts we have, depending on what we’re making, how we’re making it, where we’re making it.
“The beauty there is that there is no real limit to what is possible.”
One such company with whom Straight works with for its design expertise is Trig Creative. “They do two things for us,” explains Mr. Straight. “They do design work and CADwork on products, and they also do a lot of concept work for us based on the briefs that we give them. They’re one of a number of partners that we engage with to create new products.”
Straight’s intention from the beginning was not to be “constrained” by a factory; instead, the customer is the focus. “Ithink for us it’s an interesting time because production-led businesses will not succeed, particularly in a recession,” Mr. Straight explains.
“Arecession will squeeze out weak players and, indeed, this is evidenced by our recent acquisition of Harcostar, where much of the value in that business, in our opinion, wasn’t noticed by the people selling it.”
Despite previous attempts at purchasing Harcostar, its parent company was only ready to negotiate the deal in January this year.
“It got us distribution through two new channels: the independent garden centre sector and it also got us distribution in western Europe,” he adds. Straight now has the ability to sell its existing product range through those channels too.
“It’s not the kind of deal that’s going to make or break us,” Straight says. “However, it’s making a very positive contribution, and it’s paying back very quickly.”
Growth areas
So what does the future hold for Straight?
“At the moment, the big growth is in food waste containers,” Straight explains. “The government is pushing anaerobic digestion and persuading councils to use anaerobic digestion as a means of disposing food waste.”
Having invested £1.4 million last year in new moulds for new products, in the short-term Mr. Straight expects to see variations on the products that the business has recently brought to market; the Steelybin, the EcoSort recycling system and its food waste containers and compostable liners.
“We are also focusing quite a lot on building our non-municipal and export sales as well, because although the local authorities at the moment are a safe bet, we recognise that might not continue forever,” Straight’s Founder admits.
One thing is for certain, Mr. Straight will ensure that the business remains flexible and agile, changing the business model where necessary in order to replicate its success so far.
Click Here to read the full Corporate Profile on Stock Market Digital June 2009 – Straight PLC