A question of method

The new owners of Schmid started as independent administrators and now fully own the company. Paolo Ciccarelli, chairman, explains what has changed, where the company wants to go and above all how

“Discourse on the Method” is one of the most famous works of René Descartes, the French philosopher known for the expression”cogito, ergo sum”.  And “method” is one of the most recurrent words in this interview with Paolo Ciccarelli, shareholder and chairman of Schmid, a historical Italian converter company, to explain how a manager with a financial background (Borsa Italiana, Barclays, among others) can run a company in the world of fashion. «The word method explains nearly everything», stresses Ciccarelli. But there are, as we shall see, other key words.

Why, considering your career, do you run a company that has among its clients the world’s the most important fashion brands?

«Good question. I joined this company in 2011, when it was owned by several private equity firms. I was a consultant overseeing financial and organisational matters. During that stint I met two other highly competent managers, already working as independent administrators. This led to a collaboration based on mutual trust and strong symbiosis, not only professional but also personal».

The other two administrators were Mario Boselli, businessman and president of the trade association Camera della Moda, and Giorgio Iacobone, a famous Milanese lawyer. After a while, you became shareholders.

«In 2013, after more extensive work on the company, we realised that the problems hadn’t been solved and that a thorough restructuring was necessary. But the old shareholders were no longer interested in the company, so the possibility of buying a majority stake emerged. Mario Boselli and Giorgio Iacobone accepted my proposal, but on the grounds that I ran the company as chairman and chief executive. That’s how things went».

An impressive triple jump, from consultant to manager and finally shareholder.

«It’s true. We were three professionals, we could have made very different choices. But I can’t deny that on top of the pleasure of working together, there was a strong sense of responsibility. We were facing a beautiful Italian company, a piece of the real economy, that could close down or continue living. We decided to take the risk».

What was Schmid’s main problem?

«The lack of managerial skills , the lack of method. The internal business processes had withered away with time.  And its image, once unchallenged, had faded. My job was to rebuild a rational management, an efficient monitoring system that could tell us at any moment how we were proceeding. But above all, we had to start talking with clients again, present them an appealing mix of product, service and price. They were years of ‘dirty’ work, behind the scenes, in the workshop and back office, but which were the ground work of what happened afterwards. Method and thoroughness were the key words of that first phase».

What was the biggest challenge?

«Unfortunately, it was the struggle with the banking system and bureaucracy.  You take on the risk, put in the effort and money to save a company and the system slows you down,  makes you go round in circles, drives you mad. It isn’t done on purpose, it’s rather a question of incompetence. On one side you have people that have the power to decide the fate of your company but don’t know how a company works and on the other side unnecessarily complicated rules.”

Let’s look at the bright side then. What was the greatest satisfaction during that period?

«First of all to see that things fall into place according to the plan you drafted. I would like to use the analogy of the jigsaw puzzle, but it would be wrong. A jigsaw is bidimensional and predefined. While, everything here moves rapidly, changes, has several dimensions. And you have people. It’s wonderful to work with others and see that intelligent, curious and openminded people accept a project and work on it wholeheartedly.  They are the decisive element, the game changer.”

I’m curious to know how you came to terms with the product, which is so far away from your professional background?

«I embraced it. First of all I had the privilege to have in the team a figure like Sir Boselli. Then I looked around and I remained openminded, which enabled me to find external collaborators and consultants that had the right skills. I made mistakes, I wish to stress it. We got a collection , the consultants and the communication policy wrong. Mistakes must never be concealed. On the contrary, if you accept them and transform them into a lesson they are an eye-opener. My school of life was horse riding, because you pay for your mistakes, but if you understand what went wrong you improve. The mistakes and achievements are nearly always yours, not the horse’s, which is always a silent and reliable partner.

Let’s move on to today. At what stage are we?

«Schmid is changing. Going from being a company that supplies fabrics to one that proposes, interprets trends, collaborates with its clients. That does not sit and wait for orders but creates them, one could say. Our clients, we have to remember, are the greatest fashion brands, they are demanding and selective. Where are we now? We are certainly going in the right direction, but not at the right speed yet. As of 30th September, results indicate that revenues are up from last year and that we have gained many new clients in Italy and abroad. Now we want to establish an ongoing relationship with them. However the competition is out there, focusing mainly in those sectors where price is more important than quality and innovation, but nevertheless taking away business from us and we have to take that into account. In September, the sales campaign for the spring/summer 2016 collection and the sampling of autumn/winter 2016-2017 have started. Both seasons seem to be going very well, but races are won at the finish line, conclusions will be drawn at year end.”

It’s a good moment for Italian-made products, thanks to the weak euro but also to renewed national pride. How important are exports for Schmid?

«A lot. Our goal is to sell abroad. We are present at events in Britain, the United States, France and Spain and we sell to Italian designers that themselves sell abroad. That obviously raises the stakes, because it prompts us to pay even more attention to the quality of the product, of the service and to global trends. But we have pretty clear ideas and we are ready for the challenge.”

To wrap things up, a question on ownership. Since the end of September the three new shareholders fully own the company.  A new phase has started, with what objectives?

“Recently, after already owning more than 70%, we bought the entire capital. Now we will have a whole year, 2016, dedicated to pursuing organic growth, strengthening our domestic leadership. Over the following two years, we expect to expand also through external growth, thanks to some acquisitions to bolster our critical mass, that can transform Schmid into an international benchmark. And maybe later a stock market listing.  Effectively, it would be a return to my old passion.”