Disrupting Retail: What Will Happen?

What do you do when you’re “marked” for execution? You can either adapt – and possibly live for another day – or find ways to significantly change the game. Unfortunately, in the retail business, most of the disruption is taking place by the disrupter itself, and not those marked for extinction.

Several years ago the Bespoke Investment Group, created a listed of companies which it believed were marked for “Death By Amazon” (AMZN)  and created an index of these stocks. It includes such swell known companies as Best Buy (BBY), Barnes & Noble (BKS), Wal-Mart Stores (WMT), and Macy’s (M). As we noted in my classes this week (I teach business strategy for CUNY), several additional companies recently announced closings of physical stores  – including the entire chain (e.g., Bebe, Payless, Radio Shack). As I understand it, the projection is for over 8000 retail stores being closed this year about four times last year’s number.

So the challenge is how to change the retail model.  Many companies are looking to integrate e-commerce into its operation – as the proposed $300M purchase of men’s clothier Bonobos would do for Walmart. Target and other bigger stores are working on shrinking their stores to increase productivity and profit per square foot. Many are adapting customer-friendly  practices to optimize the number of customers still using their stores; omnibus marketing strategies, collaborating with manufacturers to improve margins and cut costs, embracing social issues that customers care about, and increasing end-customer personalization. Whether these will result in long-term success remains to be seen.

The final challenge is who can do it better and faster. Will these individual and/or cumulative changes enable the retail stores to reverse their sales and profits slide, or will Amazon, with its potentially transformative approaches to retail (e.g., Amazon Go) give it a competitive advantage.  For people with creative new ideas on how to transform purchasing and selling practices that integrate online and physical shopping, these can be exciting times.  What are your ideas?

Responsible Empowerment

 

There’s a right way and a wrong way to do something. All too often people complain because things aren’t working as they should, and by investigating exactly what is happening, the answer turns out that the “right” goal is being pursued, but the actions people are taking are faulty.  It’s analogous to leadership vs. management: the former makes sure you’re going in the right direction; the latter makes sure you’re doing it correctly. Delegation isn’t enough; management must be sure that workers are equipped (responsibly empowered) to execute as desired in order for people to achieve the goals set by the leaders.

Human Resources often is committed to talent management: hiring the right people, engaging, training and empowering people to take on those responsibilities which will lead to goal achievement – for the individual, team and company. Yet, all too often employees and freelancers fail to deliver on the hiring promise, leading managers to wonder why the people they supervise “isn’t the person they hired.”  (Barry Deutsch).

“Responsible empowerment” requires more than just issuing a job description, telling the person to take charge, and then reviewing in a global annual review. It means making sure the worker is properly empowered to do the job correctly through ongoing reviews at dyadic accountability and improvement meetings.

  • Providing a detailed description of a person’s job responsibilities and the standards by which performance will be evaluated.
  • Reviewing with new employees as often as necessary what challenges they’re having in fulfilling their jobs, enabling the person to adjust behaviors to “get it right”, and providing ongoing feedback including steps for improvement. (For instance, during the first month, each employee and supervisor might meet weekly, then monthly, quarterly, semi-annually and eventually annually. Whenever the person has a changed job description, the cycle begins again in relation to the new activities. (See eval2win.com.)

Without ongoing accountability for mastering one’s job responsibilities, supposed empowerment is likely to fail. For the supervisor, responsible empowerment includes addressing a range of leadership and management issues. Does the employee have the skills and tools and motivation to do the job well? If not, enable him/her. For long-term employees, just because he/she did the job originally hired for well, doesn’t mean he/she will be competent with new responsibilities (e.g., the Peter Principle). Are there other members in the team that are making it difficult to do the job? If so, address these issues with those members, after getting input from others involved to determine the facts.  (Vistage CEOs often share that they hire too fast, fire too slow and almost always discover that other were grateful that the person was finally let go!)

In sum, be a leader who builds a great team with effective management systems. As a manager, use responsible empowerment to ensure that each worker know exactly what he/she should be doing, how it contributes to the strategic direction of the company, and ongoing, job discussions, performance monitoring, with suggestions for continuous improvement.

How are you ensuring that you use responsible empowerment – and not just delegation?  Share your experiences.

Getting to “Yes” in Presentations

Always on the lookout for strategies and tactics that can help presenters close more deals, here’s an approach which Adam Grant (in Originals: How Nonconformists Move the World) calls: the Sarick Effect.

When developing a presentation, most of us focus on:

  • Identifying the key message we want to communicate (using the ADAP formula) so it’s compelling
  • Including supporting factual and emotional information
  • Structuring and designing the presentation so it’s engaging
  • Making it powerful – memorable and communicable so the listener can easily share with others who need to make the decision.
  • Including a sense of urgency, so the prospect will want to take action

When we do it well, we have an excellent likelihood of winning.

Rufus Griscom used a different strategy in making a presentation to help raise money for a start-up. Presenting it to Disney, he started with a slide that read “Here’s Why You Should Not buy Babble” After that he listed several challenges, obstacles and disappointments the company had encountered so far.  Disney ended up buying the company for $40 Million.

Leslie Sarick, a social scientist, provides the insight into why this approach works.  In most presentation situations, we try to be persuasive by emphasizing our strengths and minimizing our weaknesses. For an audience that’s generally supportive, this is an effective approach. But when you present to a skeptical audience, which investors often are, as they listen to your message, they’re looking to poke holes in the arguments and find reasons your suggestions won’t work.

Leading with weaknesses accomplishes four objectives:

  • It disarms the audience which was looking for a “sales” pitch
  • It makes you, the presenter, look smart and honest.
  • It increases people’s assessment of you as trustworthy
  • It increases the audience’s favorable assessment of the idea itself, as they search harder to find the positive elements.

If you ever considered buying a public company IPO, you probably read a government approved Prospectus before placing the order. It’s full of RISK FACTORS which are designed to discourage a person from making the purchase. In other words, the government understands the Sarick effect and wants potential investors, especially retail buyers to be skeptical before making an investment.

This approach reinforces our ADAP – Audience Driven, Authentic Presentations – formula. Some audiences will be skeptical and presenting the negative side of the “ledger” is critical to getting them to make a decision. Thus, a third approach is to combine the two styles: when presenting a new idea, starting positive is important. When asking for action, going negative about what’s happened so far in executing it, demonstrates excellent management and leadership skills: the ability to see what’s going wrong, assess what to do to correct the problems, and the willingness to be transparent.  This further explains why you’re looking for financial or other support, now, and adds to your credibility and sense of urgency.

When you present, have you ever used the Sarick effect to increase your effectiveness? If so, share your experience. If not, consider when it’s appropriate and the next time you use it, share that experience!

Metaphors Are Memorable

 

Think about the recent election cycle.  When Donald Trump wanted you to thinkabout an opponent ina derogatory way, he found a simple metaphor – that stuck.

Remember, these people? “Lyin’ Ted”, “Low-energy” Jeb, “Little Marco” Rubio, “Crooked Hillary” and  “Crazy Bernie”. Sure you do. Why, because, just as a picture is a thousand words, metaphors are memorable because they paint the “big picture” and leave out all the words, that often no-one wants to read!

In Conversations that Win the Complex Sale, Erik Peterson and Tim Riesterer, remind us of this point and give us some interesting pointers when we’re engaged in selling.  In a sales situation, the first thing you need to do is set the framework – draw a picture of what your prospect’s world looks like.  This allows you to demonstrate you understand his/her world and enables you to help create the framework you want to use.

(Remember, in the “old” world of sales, where people were to note features, sell benefits and overcome objections, the objections usually came from the fact that your framework missed key issues and they arose “objections”. For instance, if you’ve qualified the prospect as having the budget you need, and created a framework for high ROI and value, then price isn’t an objection anymore.)

After you’ve created the Big Picture, present the detailed sales points, providing evidence to support each one. Then, close with a metaphor that summarizes your point and makes it memorable.  Another example: a client with a warehouse, created a sales pitch in which he notes the pain many customers experience in other facilities (often hidden charges, complications, slow services), describes the quality, speed and efficiency of its logistic services, while showing the facility, and ends with a metaphor that appeals to the emotional side of the buyer:  warehousing made easy.

What metaphors do you use in your sales presentations?  Share them with us!

Innovation and Location: They Go Together!

After years of sending manfuacturing to offshore facilities, America has realized that it’s damaged our economy. As US factories close, millions of jobs were lost and many workers were not able to find other sources of work. The trade deficit ballooned and it may have reduced our innovative edge. Indeed, President Trump campaigned on a platform to bring jobs back to America and won the election.

Gary Pisano  and Willy Shich, in “Producing Prosperity: Why American Needs a Manufacturing Renaissance”,  suggest that another key benefit of moving some manufacturing back to the United States is to revitalize innovation.

Theses Harvard businness professors, argue that when a company loses it’s capability to manufacture, it also loses the ability to innovate and compete. “ Instead of job creation, we believe that the central objective of a national manufacturing strategy should be keeping America’s innovation capabilities healthy, because innovation drives productivity and productivity drives wages.”

Pisano notes that the trend to deindustrialize the US started with the globablization of supply chains. Companies thought they could move manufacturing elsewhere to be cost-competitive, yet keep design (innovation) here.  Solar power technologies offer an example. While solar cells (Photovoltaic (PV) cells) were first invented in the United States in 2012, only 3% of PV production was based in the US and Canada; 81% is Asia, with China and Taiwan leading the market.  “Once you lose the capabilities, you can bring them back, but the level of investment, activation energy to bring back is higher”, says Pisano.

Indeed, Shih discovered this first hand while working with Kodak. “ Because of earlier decisions to outsource camera manufacturing and consumer electronics assembly to Asia, the innovative capability no longer existed in the United States.” Today’s “endangered species” of American industries include semiconductors and rechargeable batteries.

Andrew Liveris, Chairman and CEO of Dow Chemical, notes “without a vibrant manufacturing secor, R&D will be done not by the US but by its major competitors. Over time, that will leave America dependent on intellectual property that’s created by other countries; American’s ability to generate its own growth will atrophy.” (Make it in America: the Case for Re-Investing the Economy by Liveris.)

Two companies that appear to be aware of this great risk include Intel, which controls the manufacturing of its proprietary process for making chips, and Corning, which maintains leadership in all its business, including Gorilla Glass, a very thin, damage-resistance glass display for mobile devices.

The authors make a second important point: that distance matters in certain industries. For example, biotechnology and life sciences are mainly clustered in Boston, San Francisco and San Diego. Semiconductor manufacturing is amassed in Taiwan, South Korea, Singapore, Shanghai and Beijing. High-end shoe producers are located in the south of Venice, Italy. Hi-tech and Venture Capital grew in Silicon Valley; the auto industry grew in Detroit, Michigan. Why?  Because these industries form “industrial commons” that operate within an “ecosystem” and share know-how and capabilities. To stay innovate, they stay close to one-another, so there are frequent interactions between workers, companies, suppliers, universities, etc. This also permit these companies to cultivate a workforce to meet expanding workforce demands in these industries, through apprenticeship and internships.

In sum, innovation is fueled by close contact and communication – not by distributing parts of the process to the four corners of the world. We must facilitate the development of ecosystems for design, innovation, teaching , manufacturing, etc. of critical industries so jobs which will enable people to stay creative and innovate new solutions for delivering superior products.

What do you think?  Share examples!

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