Why are people in the natural stone industry so reluctant to innovate ?


Anil Taneja



It is obvious by now to most people in the natural stone industry that the current slowdown in demand is unusually prolonged, that most companies  are working well below capacity, that things may not get better any time soon. Everyone agrees that something new and drástic needs to be done. But why is it so that despite having arrived at this conclusion so few companies are actually biting the bullet and trying to do really new things ? Tinkering around with minor changes seems to be not working.

This highly conservative approach, the reluctance to be innovative, to really try out new things, to experiment, probably arises due to one or more of the following factors:

1. Lack of clarity in generational transition. Many new stone businesses were created about 3 decades or more ago, in most countries. The founders were then usually between 30 to 40 years old. After working for 3 to 4 decades, most of them are now closer to retirement, or would now like to retire. But that is easier said than done. In many cases there is no next generation to take over the business. Even when there are children in the working age, very often they often want to do other things in life, or may not have the aptitude for running the stone business. The stone industry can be a tough one, often requiring working in difficult conditions.

When the generational transition is not clear, the company owner loses the apetite for investing, for experimenting, and usually his or her stone business soon starts entering the  phase of decline. It is usually not easy to sell a stone company, though this does happen in some cases. But people like to invest in a growing industry, not one they think is in decline, or in trouble, everywhere. For demographic reasons, in many countries, with fewer people entering the work force, selling the business is even more difficult. The new generation has many other choices in life.


2. Even if it is becoming clear that the current business model, say that of a slab producing factory, is in trouble, that the company  and all its immediate competitors are also in trouble, it is not very clear what is a better alternative. I have been proposing for a long time now that producers of slabs should focus on making dining tables, personalised dining tables, since the starting point of a dining table is a slab, the investment for which has already been made. But making dining tables in natural stone is not enough, they have to be sold too, in big numbers, for it to be a business. That requires selling to a new type of client, it is entering a new industry. One has to identify a new kind of distributers, exhibit in new type of fairs, do new ways of promotion.

Perhaps that may be the reason why till now few companies have taken the plunge into this new application. Once a large number of stone companies start making these tables, and start selling more and more, even if it is starting from a small base, the dynamics of the industry can change dramatically. But that has not happened so far.


3. There is always a risk of failure, in any new venture. So the temptation is to wait for others to take the initiative, if the other person succeeds, then go ahead and copy what others are doing. If that guy succeeds, you copy him, if he fails, he is a fool and you have saved a lot of effort and money. This is a very common way of thinking in the world of business: don't be a leader, be a successful follower.


4. Even if everything is clear to the businessman open to trying new things, the changes requiered may involve big investments, developing new skills, change of working methods, new mentality of employees, new type of customers- basically an entirely new business where the only common element is that one is working with natural stone. The inability to invest is a barrier too, especially when companies have been operating at negligible profits for years.


5. There is another fear that holds back many businessmen. Assume they do  something new, and are also successful. How long will it last? Will the new entrants, always lowering their prices, destroy profitability within a very short time? The new adventure must also give sustainable benefits, getting trapped in a price war is never an attractive option. There will always be competitors.


To conclude, there is no easy way out. But there is one overriding aspect of reality for most of the businessmen in the stone industry- not doing anything different, simply hoping that things will  get better soon, is the biggest risk of all. Perhaps that is something most people have still not grasped.