Waterford lad made good believes in miracles

It's a bit unnerving to hear the chief executive of Waterford Crystal describe the success of the new John Rocha glassware range as a "smash hit". But after only a few short months on the market, Mr Redmond O'Donoghue is satisfied that Waterford has indeed backed another winner. Launched in Ireland in June and in Britain in September, he says the company is now struggling to fill orders with the demand, particularly from younger customers, exceeding all expectations. "Everywhere I go all people want to talk about with me is John Rocha," he says.

The obvious success of the marriage between the revered crystal makers and the international fashion designer gives him great pride and has once again proved that Waterford is not averse to re-inventing itself to survive.

Two years ago the company was jolted into the stark realisation that its traditional crystal ranges were largely proving unattractive to Ireland's growing young population.

"Our market research found that younger people, particularly those getting married, were inclined to say that while Waterford was a wonderful brand, it's not for me just now," Mr O'Donoghue says. "They knew the brand very well. Their mother had some and it was always on display at home, but they felt it was something they would come back to when they are 37. But that was no good for us. If we lost them at the beginning we would lose them forever." The chief executive (54) frankly admits that the findings sent shockwaves through the group. "I remember one line in the report said the company should be aware that there is not an assembly line of young people coming into the market that want to buy Waterford."

The document made for grim reading but forced the group to promptly find a means to reverse this trend. Today, he is more relaxed about Waterford's prospects in its core Irish market. John Rocha, it seems, has saved the day, for now.

A member of the team that worked to turn Waterford around, he believes the company's decision to send him on the Harvard Advanced Management Programme 10 years ago has contributed to his success as part of that team.

The intensive 13-week course was very tough. "You're more or less locked up from about six in the morning until midnight with the food slipped under the door. At the end, when I was on the plane home I remember asking myself what was it all about? And my answer was that it teaches you to become an agent for change.

"I know change is talked about and has become platitudinous, but businesses that are not changing are the ones that flounder. Those that do change and re-invent themselves all of the time are the ones that flourish."

As Waterford strives to respond to changes in its key markets, O'Donoghue says he is rarely short of ideas for new products. "We're all product managers you know. Everyone I meet wants to be a product manager. There isn't a party where someone doesn't button hole me in corner and say you're missing a great opportunity . . . I try however not to be a product manager and leave that to my team."

Redmond O'Donoghue is the first local chief executive to lead the company - taking over from Dr Paddy Galvin in 1996. His family moved to Waterford when he was four where his father was a bank manager. He now lives in the city with his wife Anthea and their two children.

"I left Waterford in the 1960s to work for Ford, first in Cork and then in Britain and Europe, believing that I'd never be back here again." Coming up through the marketing route, he says the main attraction for him to return was the worldwide nature of the Waterford glass business. "It fascinated me."

He prefers to think of Waterford as a global business but acknowledges that it probably gives the workers and the entire community a certain sense of security that someone from Waterford is running the show.

"I follow in a long line of illustrious chief executives but by chance I happened to be the only one to come from Waterford. I think people like that. I don't know if it changes their lives in any way but it gives a sense that you're not a carpetbagger in for three to five years and then off again."

Given the international scale of the business he says he spends about a third of his time travelling, mainly to the US, but insists on short visits. "I like to remain accessible both to people here and those working for Waterford overseas."

In between travelling he pursues his keen interest in tennis and is a member of the Munster veterans' team. He is also a movie buff counting Casablanca and Twelve Angry Men among his favourites.

Mr O'Donoghue believes in miracles. The Waterford Crystal brand, he says, was a "marketing miracle" of its time that will never be seen again. "The brand is bigger than the business today. When I travel, particularly in the US or Australia, people are very impressed when they hear I work in Waterford, a company which they believe is a billion dollar business. And while it's not quite there yet, the huge difference between the scale of the recognition of the brand and the actual size of the company gives great hope that there are unlimited opportunities for Waterford."

The company sees itself as the Rolls Royce or Mercedez Benz of the global crystal market. Over the years it has worked hard to create and maintain that position. "A key part of our brand platform has been that Waterford never sells seconds. Anything that's not perfect gets smashed. It's quite a costly but necessary part of our marketing strategy."

Redmond O'Donoghue says the group must continually bring new products to the market. In the US, for instance, Waterford's core customer base is a relatively mature one, where people have already collected many of the traditional ranges.

"The most frequent question in the Waterford section of the Chicago department stores is what's new? They are only interested in new ranges and will move on to something else if we fail to deliver."

New products represent about a quarter of Waterford's business each year with products such as the John Rocha range, and its growing array of non-crystal items, presented at the major trade shows.

"The entire crystal industry itself is relatively small with 120 competitors going after a market which is worth $350 million (£233 million). Even if you got all of this it would still be very limiting for Waterford and just creates pressures to find other products." Another impetus is to create greater awareness of the brand. For years Waterford, along with other crystal and ceramics companies, has been upset that department stores insist on displaying its products far away from the busy first-floor sections.

"In almost all cases, you would nearly get vertigo by the time you arrive at the crystal. The number of people who actually make it that far is probably one in 25," he says. Waterford's response has been to spread the brand around the shop, introducing branded linens, pens and holiday heirlooms - such as crystal cottages - in a bid to create greater awareness and ultimately entice them to use the elevators to view the rest of the range.

Mr O'Donoghue is proud of the company's achievements in this regard, and is anxious to play down any mention of Waterford's troubled path. He says he gets angry that some people still associate the group with industrial strife and financial difficulties. "When I took over two years ago I said I wanted to draw a line in the sand. There's no denying that times were very difficult but we have moved on."

Faced with tough competition in the international crystal market, the company's decision to outsource - commission production outside of Ireland - caused outrage. But O'Donoghue insists it can now be shown to have been pivotal to its current success.

Some 26 per cent of Waterford's crystal products are currently manufactured in up to eight European countries with the remainder still produced in Waterford. "Outsourcing was very much a dirty word, but the process has been very carefully managed and has been of great value to the company."

Another key decision which he believes will contribute handsome profits was its dogged insistence in sticking with its decision to establish a presence in the notoriously difficult Japanese market. "We started there eight or nine years ago and have spent £5 million so far but it's only now that we are at a size where we can make money. There have been a lot of doubting Thomas's who have plainly told us we were mad to stick with it but you must remember that it's very expensive to enter a new market. And in Japan you have to understand that everything happens very slowly."

Mr O'Donoghue says he was always confident that it was the right move for the company. That decision was made at a very difficult time for Waterford and there was widescale concern that we were putting all of our scarce resources into one market. "I believe we were right to choose Japan. It's a nation obsessed with gift giving and fixated with luxury consumer brands. It's up to us to capitalise on that."