Innovative Approaches to Small Shop Success

When most of us talk about innovation, we're talking about new tools and techniques. But innovation isn't exclusively about technology: it's about the way technology is used.

A look behind the scenes in many small shops proves that new technology is often a response to innovative impulses, rather than a source of them.

"Innovation is changing what you do to what you need to do," says Bob Lynn of Lynn 's Jewelry in Ventura , California. "I'm always turning things over to see what's under that rock. Just because I may have put something under that rock doesn't mean it hasn't sprouted wings and flown off somewhere. It's a question of looking closely and asking, "Are we doing that correctly?"

The result of such questioning may be new tools, merchandise, or techniques. In almost all cases, though, being innovative for these small companies means changing the way they do business to be more efficient, creative, and productive.

Photo: Courtesy of Greg Stopka

Crazy for CAD/CAM

A decade ago, when Greg Stopka of Jewelsmith in Pleasant Hill , California , was first embracing CAD/CAM, most jewelers still thought the technology had no future in the jewelry industry. "The CAD technology [for making jewelry] was out there, but [most jewelers] had no way of turning that technology into money," says Stopka. Early users of CAD/CAM tended to focus more on what the computer could do rather than how it could be incorporated into a retail jewelry business. "Their mindset was more on innovation, upgrades, and technical details. They didn't fully understand the mechanics of making money with it."

A 20-year veteran of jewelry retailing, Stopka saw in CAD an opportunity to completely reinvent the jewelry store. Today, his repair and custom design centers focus on creating individual pieces for the customer, and they carry no inventory at all. "We rely on the pieces we make up," he says. "With Stuller's just-in-time delivery and a lot of other companies that have gone in that direction, I can order and have [a piece ready] in 24 hours. I'm kind of like the Dell [computer company] of jewelry."

Technology made the change possible, but it was Stopka's vision of how a successful business could be built around computers that has allowed him to develop his business model. "I don't advertise CAD at all," he points out. "People are not really interested in…how something is actually built. I keep it very emotional. In my store, I have plasma screens that showcase fully rendered pieces. The renderings are so dramatic, it's like you can touch them. So now people are looking at a graphic image - and they will buy pretty pictures."

The result is a retail jewelry business that can effectively compete with retailers selling less expensive imported goods. "The concept is highly profitable because you don't have to worry about turning inventory or managing inventory," he explains. "As a result, your numbers are a lot better in terms of gross margin and cost of goods. All you're doing is managing labor."

Stopka says his labor costs are higher than those of most traditional jewelry stores, which may come as a surprise to those who feared the introduction of CAD/CAM would mean the end of skilled bench jobs. "You cannot replace the craftsmen with technology," says Stopka. "You have to have them to make the technology work in your operation."

Stopka has been successful primarily because he recognizes that while there are some things CAD/CAM is superior at, such as transferring two-dimensional drawings and milling models to precise measurements, there are other tasks that require skilled hands. "[With computers milling the models], the bench guys can do what they do best," he says. "They can concentrate on the actual design, putting on the polish, detail finishing, and setting stones. They can concentrate on the final product."

Appreciating the contributions of his skilled workers has helped transform them into eager participants in his custom design business. "I don't want them to feel their jobs are in jeopardy [because of the new technology]. They're not," Stopka concludes. "Once they're comfortable and trust you and see what direction you're going, you're a team."

Go Team!

Teamwork is also the secret to David Huffman's success. The Cortland, New York-based trade shop owner is building a successful trade business by doing something still relatively novel in the jewelry industry - treating his bench workers like partners.

After 30 years in retail, Huffman says he's seen plenty of unappreciated bench jewelers. "I've interviewed for positions at big jewelry stores that ring in $25 million a year and are looking for a top-shelf craftsman," he says. "You walk in and there are guys standing behind the counter wearing Armani suits. There are tables full of French pastries and millions of dollars worth of inventory in the cases. Then you go back and see the shop. It's in a dingy little corridor off the edge of the lunchroom, where the guys are hunkered down over their benches. They just don't see the contribution their [bench] personnel make."

He's taken a different approach, paying his staff as much as he possibly can, offering flexible work hours, and providing as much training as possible. To avoid resentment about pay levels and encourage staff to keep a tight rein on expenses, he's opened his books to his employees, revealing even his own salary. "My employees are fiercely loyal," he says. "They're always goading me to raise prices, and I'm always arguing that I don't want to blow the customer out the door."

For Huffman, it isn't tools that lead to real innovation - it's his employees. "I trust my employees to make decisions, innovations, and suggestions," he says. "When I first started, I was working alone and struggling with taking in the jobs, logging in what I was going to do, pricing, order processing…so I turned that all over to a guy whom I hired part-time. He came up with a great organization system where we always know where every job is, what state it's in, and whether it's waiting on a part. I would never have come up with it - I don't think like that. I had to trust him and say, okay, let's see what he can come up with. And he has a real knack for staying organized."

Huffman applies the same logic to his purchases of new equipment. "Everybody looks at [the tool catalogs] and says, 'well this equipment is nice.' You could have a wish list a mile long with what's out there - induction casting equipment and microscopes and great stuff that would make life so much easier," he says. "But my guys are willing to do without [nonessential tools] because we're always looking at it and discussing it. They know what kind of bills I have to pay [and we plan accordingly]."

When equipment is purchased, training is at the top of the agenda. "I see people with lasers, and the guys don't know how to use them," he sighs. "They don't know how to do a course of welding for penetration, build it up, and then planish the metal. They just go, 'tick, tick, tick'." The lack of training means they don't get the most out of the machine and end up spending their time using a $30,000 machine to solder jump rings, Huffman argues.

"My goal is to have the best trained, best equipped people in the trade," he concludes. "I've been told I'll go broke running a trade shop. [But I think] if you've got good people, you can't lose. There's something about the synergy of a group of people with shared goals and shared visions. When you open up to a team, I think you've got a really serious survival edge over other companies."

The Right Tool for the Job

Innovation can also mean embracing technology, of course. But it's only innovation if you buy technology that expands your capabilities, not just invest in a cool new tool. "It means the first thing you do is to engage your brain before operating the bench," says Lynn . "It's like the old saying: If the only tool you have is a hammer, every problem looks like a nail."

That tendency can surface when a new tool is introduced. Enamored with the new technology, small shops will tend to use it for everything - even when an older method might be easier and produce better quality results.

"The best example is the cheap fusion welder," says Lynn . "Once a year, I run an earring post clinic, and we'll fusion weld posts on earrings. We do it on a Saturday, and we'll do $500 to $700 worth of earring posts in three or four hours. Best of all, in the 10 or 15 minutes the customer is waiting, we've got the sharks out there selling."

Although he has a laser welder, Lynn notes that this remains an application for the fusion welder. "One of my biggest giggles is watching guys do the same post repair on a laser welder," he says. "The problem with a laser welder is it will partially anneal the post, so the post bends more easily right above the weld. Am I missing something here, or is this a $35,000 second-rate Sparkie?"

It isn't, of course, adds Lynn - but it is the wrong tool for the job. The laser has many uses in the jewelry shop, but repairing posts shouldn't be one of them, he contends.

For small shops, sometimes the best new technology isn't a new technology at all. Judy Hoch of Marstal Smithy in Wheat Ridge , Colorado , discovered tumblers after unsuccessfully attempting to finish chain on a buff. "I pulled my chain into the buff, got somewhat hurt, and trashed a lot of work," she remembers. "Then I tried tumbling chain in steel and it looked terrible. I needed advice, so I spoke to technical folks at some of the larger jewelry manufacturing companies. I realized that I needed to do better prep work and choose the right media for the job. For example, pyramid-shaped media are awful for the planished surfaces on the chains I was making. I realized that I had a lot of experimentation to do to find just the right tumbling method."

Hoch's experience points out another element of innovation: persistence in the face of disappointment. When her first effort wasn't successful, she invested more time and energy into research. "Part of this comes from my formal education in engineering, and part because of a short attention span with repetition," says Koch. "I'm forever trying something new."

Eventually, that newfound expertise turned into another source of income. "I wrote a little book on the subject [of tumble finishing], because there wasn't one," Hoch says. "And I have been paid to teach some very high powered designers how to finish their work."

What all of these individual stories show us is that innovation means different things to different people, and nowhere is that more true than in small jewelry shops. For some jewelers, innovation means investing in a brand new technology and changing their business model to take advantage of it. For others, it means adopting old, reliable tools and improving the way they work. And sometimes it can even mean exchanging the new ways of working for techniques familiar to their grandfathers. From hand piercing and assembling to CAD/CAM, it's what jewelers do with their tools - and their businesses - that marks them as truly innovative.