Kvadrat - Combining agility and a long-haul view to fuel success

There are countless family-owned firms around the world (indeed, we’ve written about many of them in the 29 previous issues of Pictet Report), yet the Danish textile company Kvadrat stands out among them. That’s because there are not one but two families who see this business as their heritage and legacy. The company was founded in 1968 in Ebeltoft, a port town in Jutland, by Poul Byriel and Erling Rasmussen, who built its reputation by working with some of Scandinavia’s leading designers and artists at that time, the likes of Nanna Ditzel and Finn Sködt.

For Anders Byriel, son of Poul and now the second-generation CEO of Kvadrat, the family business has always been a feature of life. “Growing up, the business was very present,” he says. “We were two families owning the business. My father was the creative director and his business partner was the CEO. So they split the responsibilities like that.”

Since the 1990s, Anders has run the company with Mette Bendix, Rasmussen’s daughter. They divide their duties slightly differently to the previous generation – Anders manages the commercial and financial side of the business, and Mette deals with “the whole upstream”, the manufacturing side of the business; meanwhile, they collaborate on the more creative tasks in between. Yet Anders is keen to stress that the pair aren’t complacent. “We have the feel of a family business, the commitment, yet we’re still running it in a very professional way,” he says. “We have full governance and a professional board, so we’re very focused and run the business like we’re hired CEOs.”

Their reign has proved incredibly effective, particularly in recent times. In the decade from 2010 to 2020, for instance, Kvadrat tripled in size, cementing its position as the leading high-end manufacturer of textiles and textile-related products for the design and architecture industries, the arts and culture sectors, and even private individuals. How did the company manage to grow so rapidly, especially in the wake of a global financial crash? Anders references business-management researcher Jim Collins’ Flywheel Concept. “At some point you get the flywheel going and things work together,” he says. “We turned back to the core and reinvented the core product-wise. We were then very focused on going global and focused on our community, which is architects and private people who are interested in design.”

Kvadrat’s success can also be put down to a rigorous attention to the slightly less glamorous sides of the business. “People think we’re like a fashion house – that it’s all about doing products and a lot of branding,” Anders says. “But there’s another side to it, which is the supply-chain efficiency and manufacturing.” He likens the business to a Swiss timepiece, with a mechanism as beautiful as the watchface.

Despite the company’s meteoric growth throughout the 2010s, the past few years have thrown up their fair share of challenges, not least the Covid-19 pandemic and the global supply-chain disruptions that caused. Anders argues that he and his team have always faced tough times and seen them as opportunities (after all, that period of growth came hot on the heels of the 2008 financial crisis). The secret is to stay ‘adaptable and agile’, while also remaining focused on the long-term vision and strategies.

Take the pandemic as an example. The lockdowns in cities around the world impacted two sectors that are traditionally vital for Kvadrat: hotels and offices. Instead of panicking, Anders and his team shifted their focus onto two significant strategic activities. The first was consolidating the company’s global warehouses.

The second strategic shift during the pandemic was to double down on conquering the US market. Kvadrat was already an international business (Anders notes that the company’s textiles can be found in museums, concert halls and private residences across China and the Middle East). Yet the US has always been the greatest challenge, because, as the CEO notes, it’s “an extremely demanding market and a highly competitive and sophisticated one”. The potential rewards, though, are massive. Kvadrat invested in people and locations, hiring 50 people over 16 months and establishing four showroom locations in New York, Los Angeles, Chicago and the beating heart of the us furniture industry, Grand Rapids, Michigan. That initial outlay is now paying off – according to Anders, Kvadrat’s growth in the us is on course for 80 percent this year. So, as other businesses were grinding to a halt, Anders and his team were working on show-rooms and warehouses – or, you might say, the beautiful face and the fine-tuned mechanism of a Swiss watch.

Anders believes that being a family business helped Kvadrat weather that particular storm. “That’s the power of being a family business and thinking about the very long haul,” he says. “We can say, we will need to accept lower profits for two or three years, but we know we need to take the business to the next level. This is our plan and we can hold on.” Remaining agile is one thing, but a company needs to be able to look beyond the next quarter, particularly during tough and turbulent times.

Nowhere is this long-term view on display more than in Kvadrat’s approach to sustainability. Anders admits he was something of an environmental activist as a young man, something which he believes he has carried through into his leadership. It was among the first businesses, for instance, to work with an environment management system two decades ago. Today, Kvadrat is committed to the Science Based Targets initiative and has set itself a goal of reaching 100% carbon reduction in scope 1 and 2 by 2030 to become net zero in all three scopes by 2040. At the same time, it is working hard to introduce so-called “circular” products (products that use waste as a resource and are designed to enable a closed material loop). In the past year, the company has used 60 tonnes of textile waste for a newly developed circular product; next year, they are forecast to use 2,000 tonnes. “This is material that would normally have been burned or would have gone into landfill,” says Anders. “It’s only the beginning. This is the future we are entering.”

Being a family company has enabled Kvadrat to maintain a long-term perspective and to weather several rocky periods. But will it remain a family business? Anders himself previously felt that Kvadrat’s future might lie in an IPO, but he and Mette Bendix put the question to their children and the response was resounding. “They were very emotional about it and very clear. They want to keep it in family hands. So, that’s the decision.” However, he points out that this doesn’t necessarily mean the company will continue to be family-led. “Parts of the family will be owning, or working in the business and owning,” says the CEO. “But they need to first of all become very good owners. And that’s what we’re working on at the moment.”