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Decentralisation at the heart of Stokke’s transformation

A product manager by trade, at age 23 Jacob Østerhaab was already building and developing multicultural teams and performance organisations across several countries. Before joining children’s furniture maker Stokke in 2006, he spent 15 years working in various sales and general management roles at Odense Marcipan A/S (part of Orkla), Dandy (acquired by Cadbury) and Chipita, learning the FMCG trade and broadening his understanding of business models and how to drive results.

At Stokke, best known for its Tripp Trapp adjustable wooden high chair for children, first launched in 1972, Jacob started as global sales director but soon progressed to Vice President EMEA markets. By 2013 he was Vice President Commercial responsible for all sales, marketing and customer services, as well as other support functions outside Norway. Ecommerce and own-brand retail were subsequently added in 2016. After serving under three different CEOs, he was promoted to the top position in June 2017.

During his time at Stokke, the business has increased more than threefold, now present in 80 countries, with an embedded multichannel strategy including direct ecommerce and several own brand stores. Though despite playing a key role in its success, spending 11 years on the leadership team — four of which he was directly responsible for two thirds of all Stokke employees — the challenges as CEO are very different to what he’s faced previously:

“Yes, Stokke is a success story and over the years I’ve enjoyed celebrating our results, but I’ve never felt that we’d ‘arrived’ because we haven’t — we still have lots to do.”

Jacob’s shopping list is extensive. He wants Stokke to achieve greater agility, grow faster and have a higher pace of product development and innovation. Better market understanding, a sustainable cost base and a greater focus on consumer needs are also required. All the while, he wants to shake up the heritage of the 86-year-old Norwegian business, breaking down silos and bringing together the historically disparate organisation as one united and coherent unit. Leaders too in Jacob’s vision, must be on the front-line, acting as culture-bearers and getting closer to their people and their customers, more so than ever.

It’s certainly a set of ambitious goals, but 12 months since his appointment some significant progress has been made creating future organisational success.

Established in Aalesund in 1932, Stokke grew into an international brand and by the 1990s had offices spread throughout Europe. But in the following years, while retaining its original Aalesund site — some 500 kilometres from Oslo —it gradually consolidated its other European operations until by 2009, it only had one location based in Stuttgart, Germany. According to Jacob, this was a forced rather than deliberate move and because of poor management of the process, the outcome was two disparate cultures:

“We unintentionally created two silos — our Norwegian organisation where many core business functions were located, and the Stuttgart site which acted as our commercial operation. When it came to leadership styles, values, priorities, performance objectives, decision making or hiring, these two locations simply had a different ethos and approach. And the lack of consistency in the types of people hired into these divisions augmented and accelerated evolving discrepancies.”

It’s not that one was right and the other wrong, Jacob claimed. But if the business was to become more consumer and customer centric, a greater unification of purpose and processes across the sites was necessary.

Furthermore, rethinking Stokke’s organisational structure, in line with Jacob’s vision, would facilitate better market understanding and a sustainable cost base. The main challenge for the business, he explained, has always been distance between Stokke and its suppliers and main markets in Europe, but now that’s changing. While still proudly a Norwegian company, if Stokke wanted to operate with more speed and agility, it needed to centralise in Germany, as well as invest in the capability of its German team. Since his tenure as CEO, that’s exactly what Stokke has done:

“During the first 12 months, we’ve begun a new phase of simplifying structures to achieve greater agility and optimising our cost base so that its more sustainable. We’ve also organised the business so there’s more focus on product driven growth, as well as re-evaluating and redirecting product development projects and bringing people together as ONE Stokke. It’s been a mixture of changing structures and relocating roles — moving people across countries and functions — expansion with new roles and filling roles that became vacant.”

Despite experiencing a positive impact from greater decentralisation, Jacob acknowledged the process hasn’t been free from its challenges — resignations for example — but generally people have embraced change and Jacob remains adamant that his decentralisation programme makes business sense. He added:

“Stokke has retained some core functions in Norway and continues to build its Norwegian brand, with increasing emphasis on that in its communications. But the reality is having our headquarters in Aalesund is no longer practical. Only a small percentage of our revenue comes from Norway; it’s not part the EU, nor is it near our biggest markets. We now have one senior sales executive and two Account Managers based in Norway. The rest of sales is based outside of the country and most of the other commercial functions too, including marketing and ecommerce, have little or no representation at there.”

Building capability into the customer service team has also been on the agenda, with the team now 40 people strong, covering 27 nationalities (less than half of whom are German) and serving over 50 countries from what Stokke refer to as its “commercial hub” at the heart of Europe. Large scale talent acquisition, in general, has been a major focus, and Stokke has used the opportunity to improve the diversity of its organisation hiring across genders, cultures, industries, experiences and ages.

In addition to decentralising its commercial teams, the business also recently established an R&D unit in China and is in the process of setting up an operational hub in Hungary. All this activity, Jacob states, enables “greater speed, hands-on follow-up, better integration with local markets and ultimately higher productivity.”

Jacob now refers to Stokke as ‘multi-hub’ based company and believes doing so is important for embedding its new culture, with an emphasis on avoiding silos and sub-optimisations. He leads by example in this regard by not having a permanent office, but rather ‘hot-desking’ around Stokke’s locations, encouraging other executives to operate in a similar way. This is all about increasing his and the top team’s understanding of challenges and opportunities, as well as reducing their time to action. It’s a definite break from the past — Jacob’s predecessors he claims rarely left Norway — but it’s clear Stokke’s culture is changing:

Stokke Store

“Being close to our people and the business is essential. I’m very involved and this conflicts with Stokke’s heritage but being as informal as possible makes for an easier transition — my hypothetical door is always open. You can’t be everywhere all the time, though, so we’ve invested in video conferencing equipment and Skype. That aside, people still need to develop ways of participation that works — the ‘out of office, back in three weeks’ autoreply no longer fits with our processes.”

So where are leaders travelling? Most of Stokke’s sales are driven through retail partnerships and nurturing and developing those relationships remains a key priority for the business as it continues investing in larger and better-quality ‘shop-in-shops,’ alongside retailer operated monoband stores. These are also now complimented by a greater number of Stokke own brand stores, where concepts, customer experience, the ‘look-and-feel’ and service excellence are developed and honed before being replicated at partner sites.

Each Stokke store, Jacob explained, has a full range of products and all staff are trained to deliver service ‘the Stokke Way.’ Customers can enjoy testing products with their babies while having access to feeding and changing facilities all the while enjoying refreshments. Potential customers also have options to borrow and test products, as well personalise (i.e. if it’s a gift) them before they buy. Revenues, Jacob highlights, are not the top priority in these scenarios, but rather success is measured on how far the business exceeds expectations by going “above and beyond the service and experience levels offered by other retailers.”

Alongside efforts to drive growth through retail channels is Stokke’s ongoing investment in expanding its ecommerce capability. With a centralised hub in Germany, the business also has smaller ecommerce teams based in Norway, US, China, Korea, Japan and Russia. Currently, 35 countries benefit from Stokke’s ecommerce channel and this number will increase, but Jacob knows it requires resources and expertise. Retail partners, he says, help by “raising the standards regarding the level of ecommerce experiences and services required by consumers.”

But is the physical store a dying concept? Jacob doesn’t believe so and emphasised how ecommerce would never replace Stokke’s retail operations, but rather act as a tool to accelerate the overall growth of the brand. He acknowledged that shopping habits are changing, though, leading to a need for companies to rethink their strategies, but solutions lie in fewer stores and more focus and investment on customer experience:

“Shoppers are becoming more demanding. They’ve usually made up their minds about which brands and products they intend to buy before entering the store. But the store is still critical for validating those choices. And if it’s a store where our products are mixed with those of our competitors, we see this as an opportunity for us to overturn the consumer’s decision if their first choice was not one of our brands.”

Stokke Transparent Flexi Bath

Social media, of course, drives this behaviour and Stokke is considered one of the leaders in the industry when it comes to digital marketing, according to Jacob, engaging with consumers across multiple platforms. The key, though, is consistency between all consumer ‘touch points’ covering digital, ecommerce and physical stores and this is an area Jacob would like to see improvements moving forward.

Working collaboratively with retail partners to ensure maximum digital engagement is one way of achieving this, offering seamless experiences for customers before, during and after they’ve visited stores. Events too provide an opportunity for Stokke to perfect the 360-degree approach, with care given to communications which avoid encouraging customers to spend when they attend: “We’re interested in using these opportunities to build our brand rather than make transactions.”

The first Stokke own brand store has now integrated into the multi-channel strategy and Jacob expects other developments in online landing pages, instore concepts and personalisation of products to bolster activity and deliver coherent on and offline experiences.

Marketing aside, Jacob emphasised how its Stokke’s products that give it a true edge over competitors. The business never compromises on quality or what’s best for the child and sets different R&D standards: “We would never put our name on most of the products our key competitors bring to market” he says but at the same time, despite lots of product improvement and innovation in the pipeline, Jacob remains vigilant of new and old players disrupting the game:

“The industry remains fragmented with low entry barriers and while most of our successful competitors focus on one or a few segments and fewer markets, Stokke is in more categories, and more global, which makes it harder to meet consumer’s needs. The priority markets have evolved too. China now plays a key role and the US is a market we need to crack.”

Jacob believes that by getting obsessed with solving customers’ problems better and faster than competitors, while every day demonstrating passion, flexibility and ambition, the business will stay ahead of the curve. He added: “We’re a diverse bunch of people, but those are the traits we have in common. We don’t always deliver on our plans and expectations, but we work hard to continuously raise the bar by challenging ourselves to achieve more.”

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