Osprey Drives Alignment Through Strong Core Values
Osprey Packs, Inc. is highly effective at driving alignment between its operating and business models. The company designs and produces packs for the outdoors. The company is known for its innovative design; high-quality, custom-fit products; and love for adventure. It successfully drives alignment under the leadership of its founder and by prioritizing those values of innovation, quality, and devotion.
The Operating Model
Close collaboration between the design and production teams
Since its inception, founder and current head designer Mike Pfotenhauer has emphasized the importance of keeping the design team and production team working in close collaboration. He identifies that Osprey secures a competitive advantage by having the design team and production team interact directly: oftentimes, pack designs modeled by the design team are practical, but simple alteration found by people building the pack make the packs easier and faster to sew [1]. The greater simplicity can lead to fewer defects while the increased speed can lead to higher capacity in production.
Maintaining this operating model was not always easy. The company was originally headquartered in Colorado. However, they moved manufacturing overseas in 2001 after facing extreme industry pressures to lower sourcing and production costs [2]. The company valued maintaining this operating model so heavily that Mike moved his family to Vietnam and lived there for 4 years in order to establish the new product development office. His goal was to keep the design and production teams in close proximity and collaboration.
Iterative product development and tight quality controls
The office in Vietnam now employs 30 people who are responsible for everything “that is needed to get the products produced and shipped from the factories” [3]. They work in three specific areas. First, the Design and Sampling team works with Mike to develop new concepts that are iteratively prototypes and tested in a dedicated sample room. Samples can be remade in as little as one day, and the designs are continuously improved until they are ready for market. Second, the Industrializing team prepares the design for mass production. They specify materials and construction techniques and they test for production efficiency and product durability. Lastly, the Quality Control team includes five inspectors who test production within the factories on a daily basis. They check the products as well as the systems in the factors that monitor and control standards.
Strong relationships with dealers
Osprey sells packs to its end consumers only through certified Osprey dealers. Osprey maintains this network of dealers, and provides them with tools to add more value to the end customer. For example, a special tier of dealers, or Custom Fit Specialist dealers, staff an Osprey Certified Fit Specialist who can help customers find and adjust the right pack. The dealers may also own Osprey ovens, which allow customers to mold the pack belt specifically to their body shapes. Moreover, 90% of Osprey packs come in multiple sizes in order to fit various torso lengths [4]. Women’s packs are also designed to be narrower and to push the load of the pack to the hips. All certified Osprey dealers have Osprey Pack Sizers, or fit tools, that help customers find the best size for them.
Osprey further develops its relationships with its dealers by bringing a group of them to visit its factory facilities in Vietnam every few years. The goals of the visits are to give the retailers a chance to see how the packs are made and to understand the challenges of the process. During the trip, the dealers complete tasks at three stations in the production process and sew a pack together.
Compelling sponsorships of remarkable outdoor athletes
Osprey is well-known for having an authentic devotion to the outdoors and adventure. This positive brand equity serves as another competitive advantage, and it is maintained in large part through Osprey’s sponsored athletes. Osprey showcases each athlete on its official website and reports on their impressive outdoor adventures on its official blog. For example, one Osprey athlete is Ben Clark, who summited Mount Everest when he was 23 to become the second youngest American to do so [5].
By maintaining this positive brand equity, Osprey attracts employees who are also devoted to the outdoors and adventure. Attracting passionate people is essential in Osprey’s ability to keep creating innovative products for the outdoors. Moreover, due to its strong branding, Osprey can rely on word-of-mouth marketing over the more expensive mass marketing channels.
The Business Model
Wholesale model through certified Osprey dealers
As mentioned above, Osprey sells packs wholesale to its certified Osprey dealers. The dealers then sell the packs to the end consumers. Osprey packs fall into five categories: backpacks, everyday packs, hydration packs, child carriers, and kids’ packs. On the lower end, the Daylight hiking pack is priced at $50 [6]. On the higher end, the Xenith 105 mountaineering pack is priced at $390 [6].
Lifetime “All Mighty Guarantee” warranty for all customers
Osprey upholds its values of quality and devotion by offering a unique All Mighty Guarantee. The warranty states that “whether your pack was purchased in 1974 or yesterday, Osprey will repair any damage or defect for any reason free of charge.” It is a life-time guarantee through which Osprey stands by its customers and communicates an appreciation for adventure and the outdoors.
Conclusion
In summary, Osprey Packs, Inc. is highly effective at driving alignment between its operating and business models, because both models adhere to the same set of core values. The company prioritizes innovative design; high-quality, custom-fit products; and love for adventure and the outdoors. The companies competitive advantages include efficient production from a close collaboration between the design and production teams; strong brand equity from compelling sponsorships of remarkable outdoor athletes and a unique lifetime warranty; and continuous innovation from a dedicated founder and leader, an iterative concept development process, and the company’s ability to attract talent that shares its devotion to the outdoors and adventure.
Sources
- Osprey Packs, Inc. – About Us. http://www.ospreypacks.com/en/web/who_we_are
- Osprey Packs, Inc. – Osprey History. http://www.ospreypacks.com/en/web/osprey_history
- Osprey Packs, Inc. – Osprey Vietnam. http://www.ospreypacks.com/en/web/osprey_vietnam
- Osprey Packs, Inc. – Custom Fit. http://www.ospreypacks.com/en/web/custom_fit
- Osprey Packs, Inc. – Osprey Athletes. http://www.ospreypacks.com/en/athletes
- Osprey Packs, Inc. – Packs & Bags. http://www.ospreypacks.com/en/segmentation/backpacks
Loved reading your post, Sam. Over the summer I went on a backpacking trip around SE Asia and, prior to leaving, did some pretty extensive research on which pack to purchase. Osprey was recommended to be time and again from experienced outdoor enthusiasts, but I had not heard of it through traditional advertising methods previously. A potential improvement to the operating model could be to engage in a marketing campaign, in addition to athlete sponsorship, to reach people not as familiar with outdoor sports. (I ended up purchasing an Osprey pack and it lived up to its durability claims!)
Thanks for sharing, Ashley! I’d love to hear more about your trip sometime. I’ve also noticed that they’re relatively unknown outside of outdoor enthusiasts, and I’d be interested to find out if the company sees that as a priority, an opportunity, or a distraction.
A great post, Sam! Like Ashley, I’m a HUGE Osprey fan – I lived out of my Ospery pack for 7 months while I was traveling!
I found it particularly interesting how much of their operating model focuses on the human side of their operations – co-locating design and production, human quality control, etc. Do you know if they have any plan to expand into products beyond backpacks? I have to imagine the backpack market is somewhat limited, so it seems like they’d have to look elsewhere for growth. It seems like they’ve really fine-tuned their operating model to make great backpacks, but I wonder how transferable it would be if they wanted to get into tents or apparel or footwear or something.
It would also be fascinating to learn more about what it took to move operations to Vietnam – I have to imagine there are some best practices and learnings for other companies considering doing the same!
Thanks for your comment, Jackie! How much they focus on the human side of their operations was definitely what I found most interesting. I haven’t heard any news of them expanding into other products. I do know they offer some accessories!