[Intro music]
Peter Henry: Today it is my honor to introduce a very
special guest, Farooq Kathwari.
Farooq is chairman, president, and CEO of Ethan
Allen Interiors, a global company with
more than 75 years of history and 300
design centers worldwide. Farooq has been
president of the company since 1985, and
chairman and CEO since 1988.
In addition to his years of experience and proven
business acumen, Farooq serves as a
member of the Council on Foreign
Relations, an advisory member of the New
York Stock Exchange, a director of the
Institute for the Study of Diplomacy at
Georgetown University, co-chairman of the
Muslim Jewish Advisory Council, and a
board member for the Western Connecticut
State University Foundation, the Hebrew
Home in Riverdale, and Arts Westchester
to name just a few of his nonprofit
endeavors. Among his recognitions, Farooq
has been inducted into the American
Furniture Hall of Fame, the U.S. government
recognized him as an Outstanding
American of Choice, he has received the
Eleanor Roosevelt Val-Kill Medal, Ernst
and Young's Entrepreneur of the Year Award,
the Anti-Defamation League's
Humanitarian Award, and City of Hope's
International Home Furnishings Industry
Spirit of Life Award. Worth magazine
recognized him as one of the 50 best
CEOs in the United States. He embodies
all that we hold dear at Stern.
Ladies and gentlemen, please join me in
welcoming our keynote speaker, NYU Stern
alum, class of 1968, Farooq Kathwari.
[clapping]
Farooq Kathwari: It really is an honor to be here,
to be in the company of our president
Andrew Hamilton, chair of a board of Alison Mass,
and of course, Dean Henry.
You are taking your new degrees in a business
environment that, while challenging,
provides great opportunities. You'll face
the problems business leaders have
always faced: demanding customers, fierce
competition, and economic uncertainty.
You'll also be called upon to lead in a
rapidly changing world—a world marked by
ever increasing diversity. Leaders must
master the challenge of guiding
organizations in a multicultural world.
It's a challenge I have grappled with
decades before I joined Ethan Allen and
after. I have been fortunate in finding a
life-work balance.
I enjoy mountain climbing and for 36
years, have had a part-time apple farm
in in in the Hudson Valley. Most
importantly, I have a loving family
including some members who are here
today. But when I look back, I'm reminded
that my story has been marked by
persistence and luck throughout my life. In my second year of college in Kashmir,
I was informed that I could not take the
annual exams because I hadn't attended
the required a number of classes. I went
to the head of the university and said,
"Sir, the reason I was absent was that I
was playing cricket, but playing cricket
is an education in itself." He laughed,
but I persisted and he accepted my
argument. I was given sufficient credit
to appear for the exams. If I had not
convinced him, there's a strong
probability I would not have come to
America. Later, after arriving in New York
and beginning my studies at NYU, I needed
a job. I saw an ad for a bookkeeper in a
four-person
analog printing company near Canal
Street. I asked classmates: "What does a
bookkeeper do?" I had never even seen a
calculator. I was advised not to apply.
But I did. Thanks to luck and persistence, I
got the job. A year later, I got a job
with Bear Stearns—convincing
them to give me a job of a junior
financial analyst. And less than five
years later I became the chief financial
officer of Rothschild Inc., a leading
investment company. Keep in mind, I did,
I did this while majoring in international
marketing at NYU. I discovered that
America was a welcoming country, with
their hard work and a little good luck
can help a person go far. In 1985, I
became president of Ethan Allen. To say
the least, I was an unconventional choice.
Ethan Allen was a classic American brand
built by proud craftspeople and
multi-generational retailing families.
Ethan Allen and American tradition was
synonymous. The company was even named
after a Revolutionary War hero. It took
courage for Nathan Ancell, its founder,
to hand over the leadership to me. I was
a young man from the far away region of
Kashmir, a mountainous land of vivid
natural beauty, rich cultural history, and
intense political conflict. I was a
Muslim—a member of a faith then
unfamiliar to many Americans. Some
observers wondered whether I would be
accepted as the leader of such an iconic
U.S. institution. I instinctively knew that in
in a world
wracked by change, an activist had a much
greater chance of success than a leader
who served as no more than a caretaker.
I started by establishing 10 leadership
principles that continue to guide me and
my teammate Ethan Allen. You can read
them about at our website. Today, I'm
going to refer to three and they are
particularly relevant: accessibility,
prioritization, and justice. Being
accessible, making personal connections,
and helping your colleagues reach their
potential is a crucial skill for every
leader to practice. As a new president of
Ethan Allen, I needed everyone to feel as
though they could talk with me,
understand me, and trust. That included
rock-ribbed New Englanders and country
folk from the mountains of North
Carolina who had probably never met a
Farooq in their life. I look for common
ground. In one of my first speeches to
the workers in our factory in Vermont, I
praised the beauty of the Green Mountains
that surrounded us. I told them being
here makes me feel truly at home
although I must say that the Green
Mountains are small hills compared to
the Himalayas back in Kashmir.
Then I added, but I'm sure we mountain
folk can agree that most of the world's
problems are created by all those
flatlanders. Everyone laughed and
applauded. Suddenly, I was one of them.
Through gestures like these, I found
myself embraced with the people of Ethan
Allen. That's the power of accessibility.
The second leadership principle
that guides me is prioritization.
Prioritization is about putting first
things first, knowing the values that
matter most, and standing up for them—especially in times of stress. By the
1980s, Ethan Allen needed a makeover. At
that time, Ethan Allen had some 250
stores, nearly all run by independent
owners. We also had 13 manufacturing
plants scattered around the country. Like
many enterprises at the time, we operated
under the principle, if it ain't broke,
don't fix it, and my way or the highway.
We had to prioritize change if our
traditional American business was going
to thrive in a global economy. We needed to change the culture to
remind leaders their main job is to help
their people become better. We needed to
establish a strong logistics network to
deliver products at one cost nationwide.
We had to shift from fragmented
advertising to national advertising that
reflected a clear brand message. We also
needed to transform our offerings to
include include modern looks in a
variety of styles. To win support from
our colleagues, we adopted the motto that
founding Benjamin, founding father
Benjamin Franklin shared with his
revolutionaries: We must hang together or
we shall all hang separately. We also
invited over 5,000 of our associates to
visit our headquarters in Danbury,
Connecticut in groups of about 300.
Through intensive dialogue they became
our partners in implementing major
changes. Many of these associates also
grew into the company leaders we needed
to drive change. Today we are blessed
with over 200 strong leaders—over 70
percent are women and over 80 percent
have risen through the ranks. When I
became president, Ethan Allen was part of
a public company. In 1989, we took it
private in an LBO. Then we went
public again in 1993. The favorable
response to our changes resulted in our
generating over two billion dollars of
free cash in a relatively short time.
Reading today's ever shifting markets
and recognizing when the time is right
for change is not easy, but this kind of
activism is essential to success in a
complex world. About two years back, an
Ethan Allen investor claimed that we
were not realizing a profit potential.
They demanded that we sell our real
estate for short-term gains and threatened
a proxy fight if we refused. We said—go
ahead. It's a free country
A vigorous public battle resulted which
we won. It was an unusual victory that
underscored the value of an activist
approach to leadership. For 86 years,
Ethan Allen had not collaborated with
any other brand.
Two years back, we entered an agreement
with Disney and this year we launched
the Ethan Allen Disney collection. This
summer we are also launching an Ethan
Allen design studio in collaboration
with Amazon. Today, you'd better be a
disruptor or you will certainly be
disrupted. Our focus has always been to
plan for the long term. We are proud that
we have maintained profitability on a
continuous basis for 86 years.
That requires an activist leadership and
a team willing to embrace change as
circumstances demanded. I also believe
that business leaders should prioritize
social and humanitarian issues. I have
served as chair of Refugees
International and I'm currently on the
boards of the International Rescue
Committee, and the United States
Institute of Peace. At the invitation of
both the Indian and Pakistani
governments, starting in the 1990s, I
spent 12 years working towards a
peaceful resolution to the Kashmir
conflict. Recently I was invited, as Dean
Henry said, invited by the American
Jewish Committee to co-chair a
bipartisan body called the Muslim Jewish
Advisory Council. My co-chair is Stanley
Bergman, CEO of Henry Schein. Our
objective is unite people of various
faiths to speak against discrimination
and to champion the contributions of
Americans who are Jewish and Muslim.
[clapping]
It's a leader's job to rally the
team behind a few big priorities. At
Ethan Allen, I insist that our leaders
focus on no more than five important
priorities at any time. The final
final leadership principle I want to
mention today is justice. This is a word
that is rarely applied to business
leadership but I think it matters
profoundly. We believe that treating
people with dignity is good for
profitability. Justice includes such
values as managing employees fairly,
caring for communities, meeting high
environmental standards, and being
consistent in our treatment of all
stakeholders. We have received
awards from many states and the EPA,
which normally gives you fines. I have
asked our associates to disregard recent
talk in Washington about reducing
environmental standards because we see
environmental leadership as a matter
of justice. We continue to be
very proactive. While maintaining most of
our manufacturing in the US, we have also
opened two plants in Mexico and Honduras.
In both places, we maintain similar
environmental safety and social
responsibility standards as we do in the
US facilities even though this
commitment is not legally required.
Leading with justice may be the hardest
thing a leader must do. It requires the
willingness to lose when an underlying
moral principle is more important than
winning. It requires being open to
respectful conflict among people with
different points of view. It requires the
readiness to change direction when
you're wrong and the courage to stand
firm when you're right. And it requires
the ability to say no when you're asked
to take a step that your conscience will
not permit.
[clapping]
As these stories illustrate, succeeding in a
multicultural world creates serious
demands that call for activism on the
part of corporate leaders. It requires us
to be accessible to all no matter how
their backgrounds and values differ from
our own. It requires us to set priorities
wisely, to establish core values and live
by them, and it requires us to treat all
people with justice even in times of
stress and conflict. As 21st [century]
leaders, we have no choice but to accept
these challenges. We can't reverse the
trends that are producing a more diverse,
complex world. But even if we could, I
don't think we should. Leading actively
in a diverse world is hard but like many
hard things, it's also very rewarding and
I look forward to welcoming each of you
to the ranks of global leaders as we
address together the exciting challenges
of the years to come. And I'm very, very
thankful and proud to be here today.
[clapping]
