Kirkland

"Benefit. A business with Branding is able to charge a higher price for its offering due to one or both of these two reasons: Affective valence. The built-up associations with the brand elicit good feelings about the offering, distinct from the objective value of the good. For example, Safeway’s cola may be indistinguishable from Coke’s in a blind taste test, but even after revealing the result, the taste tester remains willing to pay more for Coke. Uncertainty reduction. A customer attains “peace of mind” knowing that the branded product will be as just as expected. Consider another example: Bayer aspirin. Search for aspirin on Amazon.com and you will see a 200 count of Bayer 325 mg. aspirin for $9.47 side-by-side with a 500 count of Kirkland 325 mg. aspirin for $10.93. So Bayer has a price per tablet premium of 117%. Some customers still would prefer the Bayer because of diminished uncertainty: Bayer’s long history of consistency makes customers more confident that they are getting exactly what they want. Note that the Benefit from Branding does not depend on prior ownership, as with Switching Costs."

"The nature of Gibbs’ involvement in Forestry Corp was similar to that of his role at Atlas, Freightways and Bendon. His style was markedly different to John Fernyhough’s, for example, who as chairman of Electricorp spent most of his working week in Wellington and operated as an executive chairman. Gibbs gave Kirkland clear direction and then limited his role to challenging, provoking and guiding — and then stepping back to allow the chief executive to do his job. After an initial burst in February and March 1986, he spent no more than two or three days a month on the task. Gibbs says he’s always been ‘very cunning at avoiding the time-consuming business of managing people or of getting sucked into detail’. As a result he was able to cover an extraordinary amount of ground in business and public service, while still retaining enough freedom to travel for as much as three months a year and to think of new schemes. When most of Gibbs’ counterparts could tell him what meeting they’d be attending in a year’s time, Gibbs worked hard to avoid commitments that denied him spontaneity. Wherever he was, in New York or Harare, Gibbs kept on top of his half-dozen work streams with a steady flow of handwritten fax messages, channelled through Jacquie Turner at the West Plaza office."

"One of their trickiest challenges had been to contract out logging and routine work that under the old regime had been carried out by the Forest Service’s 5000 wage earners and contractors (a different category to the 2000 salaried staff). Gibbs had no doubt that contractors would be vastly more productive than employees. But how to move these foresters, all members of the New Zealand Workers’ Union, across to the private sector? Kirkland’s solution was to offer all the foresters a year’s work with the new corporation, with no guarantees beyond that, or a year’s pay as redundancy. Nearly everyone resigned with one year’s salary in hand. Schemes were devised to help many of them use the redundancy to buy logging equipment and get started as contractors. It was an unprecedented transformation of employment arrangements for former public servants in New Zealand.[46](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-46) Richard Prebble, later Minister of SOEs, was in no doubt as to its significance:"

"Gibbs became chairman of the new state-owned enterprise, with Kirkland as his CEO. The transition went smoothly, with neither strikes nor industrial turmoil, helped by the very generous redundancy on offer. Meantime, Gibbs and Kirkland had engineered a remarkable turnaround in the performance of the organisation by applying basic private sector principles of reducing costs and increasing returns. Overall staff numbers were reduced by 60 per cent, from 7070 to 2770, including contractors working full-time for the corporation. At the same time the battle was enjoined with the large private sector customers to increase prices for wood. The financial result for the taxpayer was dramatic. An operating deficit of $71 million in the 1986/87 year was transformed into a $61 million surplus in 1987/88.[48](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-48) Gibbs was rightly proud of the effort as ‘one of the most successful corporate reorganisations in New Zealand’s history’.[49](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-49) The resultant change in productivity was phenomenal."