#04 | PNJ: Customer expectation is the starting point of creativity
During the 35-year journey from a government-owned jewelry company to become one of the top three jewelry retailers in Asia, Phu Nhuan Jewelry Company (PNJ) has been through a great deal of fluctuation when determined to redesign a manufacturer’s operating system to serve the customer’s experience and expectations.
The latest episode of “The Next Power” talk show co-produced by S-World and VnExpress on June 2 is an inspirational conversation with two leaders -Mrs Cao Thi Ngoc Dung, PNJ Chairwoman & Mr. Le Tri Thong, PNJ’s CEO – about the period of restructuring and innovation of a long-standing government-owned jewelry company that has been privatized.
At the beginning of 2017, Mrs. Cao Thi Ngoc Dung “boldly” chose a person who was said to be “not interested in fashion and in the retail market” – Mr. Le Tri Thong – to become the CEO. However, 2017 also marked a period of strong growth when PNJ recorded the largest sales since 2011, reaching VND 10,977 billion, up 28% compared to 2016.
“For me, the most daring change was choosing Thong as CEO and at that time there were a lot of criticisms,” Mrs. Dung shared at The Next Power. “What PNJ lacks is what Thong has… and I know I chose the right person.”
“Why innovative but not be effective?”
By the time listed on HOSE in 2009, PNJ already had 142 stores, becoming the company with the largest jewelry retail system in Vietnam. This national brand was later announced by Plimsoll as the 16th company in the top 500 largest jewelry companies in the world.
However, before 2010, “retail business” was not in the dictionary of Vietnamese companies. Pioneers like The Gioi Di Dong was just starting and Saigon Co.op was operating in the commercial sector. PNJ leaders quickly recognized weaknesses of a continuously expanding retail system and the fear of “outdated” in a bigger picture.
“At that time, it was only change or death!”, Mrs. Dung emphasized. “In previous years, we also changed but why wasn’t it effective? One thing we realized is that we only changed the external. We know we have to change our thinking and perception”.
The story of PNJ’s consecutive breakthrough innovation
In 2012, PNJ decided to restructure and conduct seminars so that everyone could see the need to change in order for a sustainable development. After agreeing on ideology, the company hired foreign consultants to standardize the management system according to international standards.
In fact, the company always conducts both internal and external reviews every 5 years for restructuring. “Nearly 35 years ago, PNJ has always innovated when we were close the top, but we didn’t let ourselves reach the top then prepare,” Mrs. Dung affirmed.
But it is this continuous rise that poses a problem for PNJ is how to innovate but still have to “keep the stable rhythm of the train stable”. On one hand there are the new generations. There are a lot of new ideas, bringing in best practices from many companies, many parts of the world. Another one is a success formula of 20, 30 years.
“Those two formulas collide, it’s fine. I need the collision of those streams of experience and thought,” said Mrs. Dung. “The question is, how do we manage those thoughts?”
As a leader, Mrs. Dung believes that it is her responsibility to listen and share with the team who knows old formulas and create conditions for the two sides to sit together, analyze the causes and find common ground to go together.
PNJ’s process of regeneration is also different from other companies. Originally as an MBA at Oxford University (UK) and holding senior positions at DongABank and Prudential Vietnam, Mr. Thong said that normally the company would make a huge change in structure, department, people, etc. created great impetus, but at PNJ, when researching PNJ’s channel, the leadership team had other options.
“Instead of “open surgery”, open the thoracic cavity and change the internal parts, here we do “laparoscopic surgery”, we change each part one by one, sequentially from from one part to another, all are programmed,” said Mr. Thong. “This is what makes PNJ constantly innovate but it doesn’t take much effort.”
The “memory” is gradually freed, refreshed, and then runs faster without pausing the system. However, it also requires more work in creating a program that changes parts one by one, connects those parts together and solves problems of stagnation.
Changing “family culture” and practicing “internal energy liberation”
The success of PNJ’s manufacturer in the previous stages has created an organization that everyone considers family – a sustainable culture during decades of development. But that culture will stagnate in the future. For that reason, Mrs. Dung and the Board of Directors set the first goal of “reinventing the culture” at PNJ.
“It is a story about determination, leaders, integrity and respect for the truth. In other words you must need to look directly at the problem, sometimes it’s very good, very deep, but looking at it, you can only find a way to solve it“, Mr. Thong said.
Previously, PNJ started as a manufacturing company, upholding discipline and quality management, trying to keep everything between the “margins” to control quality. The “family” style of governance is that the majority protects and does not dare to forcefully let people decide on their own issues.
To innovate, PNJ conducts evaluation and examination of the foundations and values that the company has, maintaining important margins but expanding the creative space, promoting thinking outside the box. Change decisively and consistently from the Board of Directors to the staff and deployed downwards.
For example, instead of having to report multiple levels for a new idea, PNJ uses the “workplace” tool so anyone can post their initiative or question and 5 minutes later can collect ideas that people comment below. Even PNJ has created a business incubator for internal “sharks” to invest in business projects of members of the company. PNJ jointly invests and shares profits.
“Your ideas may not bring any economic value, however, the program makes you confident, creating an atmosphere that I call faith in each person“, Mr. Thong shared. “So creativity is no longer an exclusive story of those who report directly to me and Ms. Dung, but even those in the lowest positions still have a very democratic space for people to put their ideas“.
This way is also the company’s practice of “liberation”, which means releasing the energies inside the organization, creating new thoughts, methods, conflicts, and from there, becoming a magnet to attract new creative resources.
Mr. Thong emphasized: “Along with that is the story of us adding more capacity, adding more methodical skills for you to be creative. Because creativity without a foundation, sometimes it becomes a black hole, creating huge costs for businesses.”
From manufacturer to professional retailer
In 2012, PNJ successfully inaugurated PNJ Jewelry Factory, which is considered as one of the largest jewelry processing factories in Asia with a production capacity of over 4 million products per year.
After that, PNJ simultaneously opened the largest jewelry, diamond and watch center in the whole system in Ho Chi Minh City, and continued to expand branches in other provinces and cities, bringing the total number of retail stores up to nearly 200 stores nationwide.
By the end of the first quarter of 2022, PNJ system is managing and operating 338 gold, silver and other jewelry retail stores.
“With PNJ we started as a manufacturing company, and then we sold the products we made. The upcoming journey we are looking at, we are not only a manufacturer, but also a professional retailer “said Mr. Thong.
In the past, most manufacturing companies had very strict processes, especially gold companies, where the accuracy of product quality and material diminish was very high.
The characteristics of the company’s governance are obeyed, leading to a lack of creativity and autonomy in the unit and in the retail system. PNJ’s innovation in this period is recreating the operating system in the direction of operating relationships with customers, improving customer experience.
It is with that new relationship foundation that helps PNJ expand to more business lines than not only jewelry, but also beautify life, beautify people, even lifestyle. Looking to the future, PNJ sets a goal of designing jewelry separately, tailoring for each customer segment, expressing personalization and making individual statements of personality through jewelry.
“The producer has always had the language of their own. And that is a challenge” Dung said. “Now from the perspective of retailers to make their buyers feel the most beautiful and satisfied. If a retail system is a factory customer, I have to speak the language of the customer, but I can’t speak the language of production.“
Up to now, PNJ has never stopped innovating itself. The two leaders said that PNJ is both a manufacturer and a retailer, unlike any other factory in the world. Because of this feature, it requires the company’s artisans to be creative, making products that cannot be imported.
“With PNJ’s foundation, there are still very good strokes. But if I don’t look further, I will be lulled by that stroke and speed” said Mr. Thong. “Besides converting me into a professional retailer. The moment is now that we have to know how to take advantage of the new out there in the world, we have to be one step ahead.”
During the 35-year journey from a government-owned jewelry company to become one of the top three jewelry retailers in Asia, Phu Nhuan Jewelry Company (PNJ) has been through a great deal of fluctuation when determined to redesign a manufacturer’s operating system to serve the customer’s experience and expectations.
The latest episode of “The Next Power” talk show co-produced by S-World and VnExpress on June 2 is an inspirational conversation with two leaders -Mrs Cao Thi Ngoc Dung, PNJ Chairwoman & Mr. Le Tri Thong, PNJ’s CEO – about the period of restructuring and innovation of a long-standing government-owned jewelry company that has been privatized.
At the beginning of 2017, Mrs. Cao Thi Ngoc Dung “boldly” chose a person who was said to be “not interested in fashion and in the retail market” – Mr. Le Tri Thong – to become the CEO. However, 2017 also marked a period of strong growth when PNJ recorded the largest sales since 2011, reaching VND 10,977 billion, up 28% compared to 2016.
“For me, the most daring change was choosing Thong as CEO and at that time there were a lot of criticisms,” Mrs. Dung shared at The Next Power. “What PNJ lacks is what Thong has… and I know I chose the right person.”
“Why innovative but not be effective?”
By the time listed on HOSE in 2009, PNJ already had 142 stores, becoming the company with the largest jewelry retail system in Vietnam. This national brand was later announced by Plimsoll as the 16th company in the top 500 largest jewelry companies in the world.
However, before 2010, “retail business” was not in the dictionary of Vietnamese companies. Pioneers like The Gioi Di Dong was just starting and Saigon Co.op was operating in the commercial sector. PNJ leaders quickly recognized weaknesses of a continuously expanding retail system and the fear of “outdated” in a bigger picture.
“At that time, it was only change or death!”, Mrs. Dung emphasized. “In previous years, we also changed but why wasn’t it effective? One thing we realized is that we only changed the external. We know we have to change our thinking and perception”.
The story of PNJ’s consecutive breakthrough innovation
In 2012, PNJ decided to restructure and conduct seminars so that everyone could see the need to change in order for a sustainable development. After agreeing on ideology, the company hired foreign consultants to standardize the management system according to international standards.
In fact, the company always conducts both internal and external reviews every 5 years for restructuring. “Nearly 35 years ago, PNJ has always innovated when we were close the top, but we didn’t let ourselves reach the top then prepare,” Mrs. Dung affirmed.
But it is this continuous rise that poses a problem for PNJ is how to innovate but still have to “keep the stable rhythm of the train stable”. On one hand there are the new generations. There are a lot of new ideas, bringing in best practices from many companies, many parts of the world. Another one is a success formula of 20, 30 years.
“Those two formulas collide, it’s fine. I need the collision of those streams of experience and thought,” said Mrs. Dung. “The question is, how do we manage those thoughts?”
As a leader, Mrs. Dung believes that it is her responsibility to listen and share with the team who knows old formulas and create conditions for the two sides to sit together, analyze the causes and find common ground to go together.
PNJ’s process of regeneration is also different from other companies. Originally as an MBA at Oxford University (UK) and holding senior positions at DongABank and Prudential Vietnam, Mr. Thong said that normally the company would make a huge change in structure, department, people, etc. created great impetus, but at PNJ, when researching PNJ’s channel, the leadership team had other options.
“Instead of “open surgery”, open the thoracic cavity and change the internal parts, here we do “laparoscopic surgery”, we change each part one by one, sequentially from from one part to another, all are programmed,” said Mr. Thong. “This is what makes PNJ constantly innovate but it doesn’t take much effort.”
The “memory” is gradually freed, refreshed, and then runs faster without pausing the system. However, it also requires more work in creating a program that changes parts one by one, connects those parts together and solves problems of stagnation.
Changing “family culture” and practicing “internal energy liberation”
The success of PNJ’s manufacturer in the previous stages has created an organization that everyone considers family – a sustainable culture during decades of development. But that culture will stagnate in the future. For that reason, Mrs. Dung and the Board of Directors set the first goal of “reinventing the culture” at PNJ.
“It is a story about determination, leaders, integrity and respect for the truth. In other words you must need to look directly at the problem, sometimes it’s very good, very deep, but looking at it, you can only find a way to solve it“, Mr. Thong said.
Previously, PNJ started as a manufacturing company, upholding discipline and quality management, trying to keep everything between the “margins” to control quality. The “family” style of governance is that the majority protects and does not dare to forcefully let people decide on their own issues.
To innovate, PNJ conducts evaluation and examination of the foundations and values that the company has, maintaining important margins but expanding the creative space, promoting thinking outside the box. Change decisively and consistently from the Board of Directors to the staff and deployed downwards.
For example, instead of having to report multiple levels for a new idea, PNJ uses the “workplace” tool so anyone can post their initiative or question and 5 minutes later can collect ideas that people comment below. Even PNJ has created a business incubator for internal “sharks” to invest in business projects of members of the company. PNJ jointly invests and shares profits.
“Your ideas may not bring any economic value, however, the program makes you confident, creating an atmosphere that I call faith in each person“, Mr. Thong shared. “So creativity is no longer an exclusive story of those who report directly to me and Ms. Dung, but even those in the lowest positions still have a very democratic space for people to put their ideas“.
This way is also the company’s practice of “liberation”, which means releasing the energies inside the organization, creating new thoughts, methods, conflicts, and from there, becoming a magnet to attract new creative resources.
Mr. Thong emphasized: “Along with that is the story of us adding more capacity, adding more methodical skills for you to be creative. Because creativity without a foundation, sometimes it becomes a black hole, creating huge costs for businesses.”
From manufacturer to professional retailer
In 2012, PNJ successfully inaugurated PNJ Jewelry Factory, which is considered as one of the largest jewelry processing factories in Asia with a production capacity of over 4 million products per year.
After that, PNJ simultaneously opened the largest jewelry, diamond and watch center in the whole system in Ho Chi Minh City, and continued to expand branches in other provinces and cities, bringing the total number of retail stores up to nearly 200 stores nationwide.
By the end of the first quarter of 2022, PNJ system is managing and operating 338 gold, silver and other jewelry retail stores.
“With PNJ we started as a manufacturing company, and then we sold the products we made. The upcoming journey we are looking at, we are not only a manufacturer, but also a professional retailer “said Mr. Thong.
In the past, most manufacturing companies had very strict processes, especially gold companies, where the accuracy of product quality and material diminish was very high.
The characteristics of the company’s governance are obeyed, leading to a lack of creativity and autonomy in the unit and in the retail system. PNJ’s innovation in this period is recreating the operating system in the direction of operating relationships with customers, improving customer experience.
It is with that new relationship foundation that helps PNJ expand to more business lines than not only jewelry, but also beautify life, beautify people, even lifestyle. Looking to the future, PNJ sets a goal of designing jewelry separately, tailoring for each customer segment, expressing personalization and making individual statements of personality through jewelry.
“The producer has always had the language of their own. And that is a challenge” Dung said. “Now from the perspective of retailers to make their buyers feel the most beautiful and satisfied. If a retail system is a factory customer, I have to speak the language of the customer, but I can’t speak the language of production.“
Up to now, PNJ has never stopped innovating itself. The two leaders said that PNJ is both a manufacturer and a retailer, unlike any other factory in the world. Because of this feature, it requires the company’s artisans to be creative, making products that cannot be imported.
“With PNJ’s foundation, there are still very good strokes. But if I don’t look further, I will be lulled by that stroke and speed” said Mr. Thong. “Besides converting me into a professional retailer. The moment is now that we have to know how to take advantage of the new out there in the world, we have to be one step ahead.”
