Profiles in Doing Both: America's Favorite Piano Hits a Sour Note

One Family. One Product. One Century.

That's the heritage of the Onofrio Piano Co. of Denver. Actually, the proud dealer celebrates its 110th anniversary this year. Since its founding, the company has supplied pianos to everyone from saloons to the Colorado Ballet.

With experienced service technicians, knowledgeable salespeople and acclaimed music instructors, Onofrio offers almost anything customers could want from a piano dealer--except, perhaps, "America's favorite piano"--Baldwin.

Founded nearly 150-years ago, Baldwin was one of America's most storied makers of musical instruments. The choice of musicians from Dave Brubeck to Carly Simon to Igor Stravinsky, Baldwin built its reputation on remarkable craftsmanship and distinctive sound. Customers loved its products. And dealers, including the Onofrio family, loved selling them.

For decades, Baldwin treated its business partners as an extension of its corporate family. It took their inputs to heart in product design, and operated with a consignment model that made it affordable for dealers to fill their showrooms with beautiful, hand-crafted products. At a Baldwin dealer, customers could see and touch dozens of pianos.

When Baldwin brought in a new management team steeped in consumer packaged goods in the late 1990s and early 2000s, however, the company began to hit sour notes with its dealers. The new team cut retailers out of product discussions, opting instead for market research data. Then Baldwin management insisted its dealers pay in advance for products before they could be delivered to a showroom.

To some, the company's new direction was incomprehensible. The changes forced dealers to rethink how they financed their businesses and from whom they could get support on product issues. With tensions mounting, a group of 20 of Baldwin's largest dealers wrote to the company's board of directors, citing weaknesses in the company's new direction. Though they represented half of Baldwin's revenue at the time, the company did little to appease these constituents.

With Baldwin's future becoming more unstable, many dealers began the painful process of severing ties with the manufacturer. Onofrio did. And so did Dollarhide's Music Center of Pensacola, Fla. After years--even decades--of selling high-end, American-made Baldwin products, these dealers migrated to other brands to stay afloat.

While many dealers thrived, Baldwin did not. When the loyalty of its experienced sales and service professionals began to erode, Baldwin's fortunes tumbled. The company endured management changes and bankruptcy. Then in late 2008, the company closed its Trumann, Ark, manufacturing facility and laid off all but 14 of its local workers. The workforce reduction came little more than a year after Baldwin made a heartfelt video showcasing its factory and dedicated workers.

Today, the company's owner, the Gibson Guitar company, is trying to reclaim the magic that was once Baldwin. But it is hard. Some Baldwin pianos are made in China. And many dealers remain cool to the brand. Though some remain loyal, others struggle to recapture the love they once had. To many piano aficionados, Baldwin simply lost its cachet.

This is the sad legacy of what can happen to a company that takes its partners for granted. Instead of additional leverage, they only net additional headaches.

Baldwin would have been better off committing itself to pleasing customers and its partners both. But to the company's former management, customers were everything and partners were mere middlemen.

Smart companies, however, recognize that customers and partners are equally important constituents with different needs and demands. And they work to satisfy both.

If Baldwin had done so, it wouldn't have found itself playing the blues.

Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today's Profits and Drives Tomorrow's Growth. Follow Inder on Twitter at @indersidhu.