I joke all the time on the golf course when we talk about getting new clubs, saying, "you know, it's not the club, it's the player." Of course, we're always ribbing each other, insinuating no club is going to fix our golf swing; and this is exactly the problem I see in many business settings. Whether it's adding Slack, Workboard, GitHub, Shopify, etc., it's not the tool or the solution that will fix the business, it's the business structure and ability to manage within a standard operating procedure (SOP).
Whether you work in a small business or large one, creating an operational structure that is agnostic to the user is much more important than the tools you use; and, in fact, is the only way to assure the tools are used consistently and effectively.
What does this mean and how do I build a sound operational structure?
Let's assume for a moment, you run a small business; you provide a general operational structure with job titles and descriptions, so people have a basic idea of their role and responsibilities. Like many small businesses, resources are stretched thin, so often people double up or cross over to help complete tasks and keep the business progressing. This can get confusing and cause problems if there isn't a sound operational structure in place; a system that provides clarity in each role, what is expected, and how to perform any tasks. I'll use a real life example from when I ran a retail organization during the mid 90's. There was a general SOP (standard operating procedures) manual, but it was too general and many of the store managers had made modifications to fit their personalities and preferences. So you couldn't go into different stores and necessarily find the same operational model and user experience. The argument for allowing the flexibility and edits in application of the SOP was to just judge the performance, and the ones performing better should be copied. I see this now when companies roll out or test new solutions like Slack; they put it out there with some general guidelines, and then wait to see how people use it before setting any concrete policies. The assumption is they will discover through use how to best apply an application, and maybe the application will help them improve their operations...kind of like buying a new club will help my swing, but nobody is paying attention to the mechanics of my swing.
But there's a fallacy in this thinking, as it shifts the responsibility and accountability away from the people responsible for managing the company. In my case, when I encountered this problem, I decided there needed to be just one SOP in every store; and that if I could shift the focus away from managing all of the unique adaptations, we could collectively apply more effort to sales and driving revenue. I asked a group of store managers to compare everyone's structure and propose a single standard operating procedure we could apply with uniformity. The goal, I told them, was I wanted to accomplish two things; first, I wanted to be able take any person from any store, move them to another location and have them fully operational and functional immediately. Second, I wanted to focus less on operations and more on driving revenue. Once we agreed on a uniform SOP, we then implemented a project of converting every store into the same format, down to every detail of where we kept informational notebooks behind the cash wrap, where supplies were stored, etc. You could literally walk into a store on the east coast or west coast and not know the difference. We made this a non-negotiable, and carefully laid out exactly how to implement and manage, so they could focus more time on customers. The results were over a six month period, saw our revenues increase 21%.
The point is we focused not on the tools, but the use of the tools; and made sure we had consistency throughout the organization.
Large businesses seem to struggle with this even more, as their ecosystems tend to create villages and power plays, where internal competition and politics create inconsistency in operations and wasted and/or duplicate efforts. The challenge is sometimes greater in a larger organization, as breaks in the standard operating procedure with use of multiple and sometimes redundant tools hampers the exchange of information, slowing the ability to understand and react to insights. For example, I've watched organizations use multiple email and instant messaging tools without committing to one across all divisions; allowing each division to determine what is best. Consequently, communication across channels using different tools is broken, and opportunities to cross pollinate ideas and address issues are delayed or missed. It would more effective if the company selects and commits to a single platform, or integrated cluster of platforms, and carefully spells out the rules of use without allowing for any exceptions. This way everyone is using the same tool, working within the same guidelines, and focused on their roles and output over finding an alternate way to accomplish their tasks.
I think I'm beating a dead horse, so enough with examples. Suffice to say, don't search for a tool that will make you do your job better; figure out how you want to do your job better and find a tool that fits. Just like in golf, a new club is not going to lower your score or add significant distance or control; and in business, a new user tool is not going to solve any inherent structural issues.
As my friends like to say to me, "Just hit the ball".
I have a theory based on growing up in a traditional retail environment where buyers actually reviewed trends, selected products, created assortments, and presented a refined and cohesive product presentation to the customer that was manageable both from the customer’s perspective and the seller. Before we had the internet and Amazon (the jungle of products), customers typically shopped in stores based on the perception of the store’s brand and product mix; which was usually fairly focused and easy enough to sort through once you were in the store. If sales people knew their stock well enough, they worked in the same manner as search works today on websites (well, some search); if you were unable to locate what you wanted quickly, you asked a sales person (or they came to you first) and they would locate and present products based on your needs.
Now I’m not suggesting buyers don’t do the analysis and planning needed to assort products online, I’m just saying they are more haphazard in their approach and less committed to their presentations. Their assumption is just build a site with as many products as you can within a reasonable look and feel, and let the customer decide what they want. This is especially true with sites that depend on drop ship relationships, where there is no real inventory risk; so they figure, why not just put up more products. More products, more options for customers, and more sales with less risk…right? And of course if you listen to all the marketing geniuses out there, everything can be personalized and delivered to meet the customers’ needs, when they want and for the price they expect.
Well, it doesn’t actually work that way.
Amazon is the exception, as they built the model based on over populating a site with products and just letting the customer find what they want primarily based on price; and they are successful because they have extended the assortment to virtually everything you can think of, and made price the primary motivator. It’s really not that hard to sell stuff if you don’t really care about the profit margins, not a priority for Amazon like most retailers. So people shopping on the site are doing so with the perception they’ll get the best deal, and not necessarily searching to discover new brands or products. My guess is brand loyalty is lost in the shuffle; think about it, if you come across an item you think you want because it’s familiar, but all of the sudden Amazon shows a few options with better pricing, what happens? Duh, you’ll most likely pay the lower price and any loyalty you may think you have flies right out the window…especially since you’re doing it somewhat anonymously and not face to face.
Most retailers fail at replicating this model, and instead, just create a site that is overcrowded and overwhelming to the majority. It also dilutes their brand and confuses the customer as to what the store feels are viable products; so stores are just being lazy and non-committal in their presentation, assuming it’s better to have too much than not enough. Retailers are leaning on marketing and becoming “reactionary” in their buying, and losing the ability to plan effectively. It’s as though they are asking the customer, “Just tell me what you want and I’ll serve it up,” instead of providing a clear and cohesive presentation and actually selling in a proactive way based on a brand image or message.
Why is this happening?
I have a theory, and my opinion on this based on having the fortunate opportunity to learn and apply buying skills before computers did any, and I mean ANY of the work for you. Before any product lands on the shelf of a store, or appears on the page of a website or catalog, someone should be doing a detailed assortment plan. This is a planning process that explores and understands the presentation of products based on a brand’s goals and objectives, carefully taking into consideration external data and influencers to help refine and shape the assortment BEFORE a buyer makes commitments and actually shares with the consumers. It provides the subjective reasoning needed to validate product selection, and helps a retailer and/or a brand present a cohesive assortment based on their brand message; and not just an array of products waiting for customer feedback to decide if they’re right or not. For as much as we may think search is the equalizer and customers can navigate through to find the ultimate product, matching their expectations in every way; the reality is the majority of people want the seller, the retailer, the brand, to tell them what they have in a clear and simple way so they can decide without having to invest too much time.
What’s happening is technology, which should be making it easier for retailers and consumers to shop, is actually making it more complicated. Even trying to decide what movie to watch is a mind bending proposition…go to your Amazon Prime or Netflix account and you end up spending most of the evening just sorting through what movies you may want to watch, and usually fall asleep before you even pick one. Shopping online with most retailers is not much different, and until retailers revert back to the foundational disciplines that drove product assortments in the past, brands will continue to fade, assortments will continue to lose focus, and consumers will be staying up late to pick a movie and decide what was they wanted to buy in the first place.
Don’t get me wrong, I love technology and what it can do for both the business user and the consumer; but I think too many people in the retail world are using it to cheat, trying to skip to the end, and not learning or understanding the foundational steps needed in analyzing, reviewing, selecting, and assorting a presentation. So instead of retailers telling customers who they are through the thoughtful and careful selection and presentation of products, many are letting technology steer their decision and waiting for the consumer to tell them what they want. I have news for you, this is not a chicken or the egg situation. In order for customers to understand what you’re selling, you have to explain in a visual way, what you represent; and without a strong assortment planning process, this won’t happen and everything online becomes a reaction without much substance.
If everything is a reaction, creativity is lost and innovation becomes redundant. So take the time to plan in a deliberate way, with a clear message; help consumers by simplifying the selection process, not complicating it. Learn how to build an assortment plan.
Everyone in the world of retail, e-commerce, omni-channel selling, or whatever you want to call “selling products and services to consumers”, are on a wild goose chase trying to “personalize” the experience and provide the customer what they want. Technology, artificial technology to a large extent, is often considered the holy grail in achieving this result.
In this race for the ultimate personalized experience, Marketing dominates the stage and Merchandising is playing second fiddle. But that’s proving to be a backwards approach, like putting the cart before the horse; many times, putting an empty cart before the horse when expectations fail to meet the reality.
What most are missing is how this hyper focused attempt to reinvent one skill set is diluting and hurting another. More specifically, how marketing is forgetting the role merchandising plays; and how retailers are not focusing enough on their brand and the products and/or services that drive their brand. More often they are over populating their sites with disconnected products, trying to be everything to everyone, assuming “personalization” will parse and present the relevant products as needed. It’s like going on a date with someone and they are trying to impress you by saying they do or like everything you do as you share your personal story. Somehow the sincerity gets lost.
As businesses focus on developing tools providing a more customized and/or personalized experiences, what is happening is the equivalent of putting the cart before the horse. And even if some manage to get the horse out in front, they forgot how to train the horse and it doesn’t know which way to go. In this case, “marketing” is the horse and “merchandising” is the cart. Every retailer needs product, or a cart to pull; and marketing usually does the pulling. But merchandising is quickly being diminished and diluted to where there’s just too much in the cart to pull and little motivation for people to even look inside. All the carts are looking the same and instead of designing a cart that is actually appealing from the outside based on what’s inside, the drive for personalization and providing the right product, at the right time, to the right customer, is creating a homogenized view…everyone is turning right and marching in a vicious circle.
Merchandising is not a science; rather, it’s an art and developed skill that uses science to augment and enrich a presentation.
But personalization, and technology in general, are driving merchants to rely too much on analytics and reactionary planning, over insightful and visionary presentations. Too many retailers are taking the approach, tell me who my customer is and what they want and I’ll go find or make the product for them. Instead of more boldly stating, this is who we are, what we represent, and here is the product within that vision; with that, tell me who you are and we’ll help you build a relationship with our products. True merchandisers, buyers, and visual artists in retail understand how to assemble and paint a picture through a carefully crafted and orchestrated presentation of products; relying on a combination of historical analysis for context, but focusing more on visionary development aligned with the brand message or personality of the business. Customers are then able to understand why they came there in the first place, searching as much for a connection to the brand as to the defining products.
An excellent example of what I mean is found with Patagonia. Customers are more than customers, they are family, they are related, they embrace the brand because it is so very clear what Patagonia represents; the product is just a direct extension of their brand, so customers are searching for ways to enrich their personal story or journey through an array of products over searching for some random one off or unrelated products that happen to fit a in the moment. REI is another good example, and expansion of what a retailer can do versus a wholesaler; with Patagonia being more representative of the later. REI built its business on the personalization of their assortment and presentation over time, across brands, and not in the immediacy of a moment or single online search experience. It took years of relationship building between customer and company, to where the merchants could understand the needs and wants of their customers in a broader sense; and then aggressively build new products and new avenues for customers to engage without a single minded attention on the right product, at the right price, and the right time. It’s more about the right brand experience providing an opportunity for the customer to discover more products in context of their brand experience, over a single product based on a hyper focused personalization algorithm and response.
The fallacy of personalization is too many believe with the right technology and ability to see what the customer is doing and understand their intent at any given moment, they can serve up the right product without first setting the stage with the overall presentation and brand experience. Personalization should be more about building the relationship of the brand with customers so products are a function of the brand identity in context of the customers’ expectations. In too many sites, where the brand message is more about price, value, free shipping, or some other loyalty lacking attribute; customers are searching blindly across sites based on a single motivation, because retailers are striving for immediacy in gratification over sustainability in relationships. We see less companies like Patagonia or REI, where their focus is more about building a relationship with the customer over selling a single product; where they build sustainable sales over the sporadic and disconnected purchases filling too many online shopping baskets.
Retail is just one big block, lined with too many stores and too many doors for any person to reasonably shop; so the emphasis should be on merchandising the products to fit the brand and tell a clear and compelling story. And not on carrying the largest selection or most diverse assortment where price is the primary motivator.
Instead of putting the cart before the horse and discovering the cart is either empty or not filled to a customer’s expectations; invest more time in finding the horse, or the product that will pull the cart. Don’t ask the customer what they want, tell them who you are, what you carry, and why; then work on personalization that builds a story with the brand so customers discover products in context of more general desires over impulsive price driven purchases.
Build an environment to buy, encourage a relationship, not a sale.
It seems to me, for all the benefits to building business, e-commerce has created a more reactive instead of proactive business environment; marketing often over shadows merchandising, and more and more businesses seem to be abandoning the foundation of building a strong merchandising plan.
I know, some will immediate argue the amount of information available in real time is providing better quantitative data driving more informed decisions; yet, from what I've seen, both looking from the inside and outside, is a general reluctance to map out a merchandising direction based on applying more subjective reasoning to analysis. Instead, I see a reliance on analysis and dependency on numbers without enough creative and proactive thinking. Of course, this is not true for "everyone", but it seems the ability to subjectively review a merchandise plan and understand how to adjust based on realistic variables is fading.
There are core steps everyone should take when building a merchandising plan, and helping buyers become more proactive in their planning process.
Reactive or Proactive? Actually, you need to be both, but the speed at which we operate now often creates a more reactive environment where people forget to plan; which from my perspective, limits creative thinking and analysis. You can be a buyer and just react to what you need, or you can be a merchandiser and build a plan, a road map to a more creative and proactive presentation. Think about it.
Early in my career I met someone who contributed to my professional development, and was somewhat of a mentor to me in the world of product design and development. Sadly, he passed away not that long ago, well before his time; but his insights remain with me and have impacted my actions across many areas of business development and management, and not just products.
He once said during a product review meeting, "Price, Quality, Delivery...Pick Two," and exuding the child in me, I replied, "What do you mean?" I mean, I was young, naive, and thought, why can't I have all three?
Rick (my friend) looked at me, smiled, and proceeded to explain how the world was not always as it seemed. Specifically, when producing apparel products (which is what we were doing), he taught me to consider everyone is trying to achieve the same end goal, that is, make a profit. So if we pushed the factory too hard for the absolute best price, something else had to give; either quality or delivery.
Consider a factory working to supply multiple customers, evaluating the costs and returns for each one; they may accept a low cost initially, but continue to work on adding new business and looking for ways to improve their performance and bottom line. So in the course of doing business, if they find another customer willing to pay a higher price, don't be surprised to discover your production has mysteriously moved out a few weeks or more and now past your anticipated delivery date. You may have secured the best price, but it's not going to do you much good if the product doesn't show up, will it? The story continues, you except the delay, calculating the cost and potential loss of sales due to a later delivery, but feel the margins are good enough and you'll be fine. But the factory doesn't stop there; it continues to look for ways to improve it's bottom line and finds even more customers to replace your business at higher margins. But they don't want to give up your business, so out source the production to another smaller factory you don't know about. Now the quality takes a hit, as the new factory didn't quote the same specs and they also need to make a profit; so they look for cheaper materials or short cuts in production to cut costs and push out a product you receive late, and at a lessor quality...but, hey, you got the lowest price. So if you're an optimist, you'll be using all the profit you thought you were going to achieve to pay for the markdowns just to get rid of the product you actually received.
This happens in other areas of business as well, and not limited to factories. For example, during my time selecting store locations and negotiating leases, I found the same idea held true; and all too often, people on one end of a lease thought they were getting a great deal without carefully considering how. My dad taught me this too, as he invested his life in the management of commercial real estate, but I was able experience first hand when negotiating leases for stores around the country. I would find myself being hit from both sides; the management or owner I worked for would pound me to get a better price, as if the price were the ultimate victory in negotiating the deal, and the developer or landlord would be fighting to maintain their goals while carefully disguising how they buried the costs in the lease, creating a perception of a price that didn't exist. Same idea, price, quality, delivery; pick two.
If you look in the market today, you see this with many of the larger retailers as well; they wield a great deal of leverage and push for the absolute best margins, forcing factories or businesses to trim every possible corner to meet their demands. These companies profess to driving better values for their customers, but ultimately, they are only degrading the production, lowering the quality, and creating false perceptions of value. I could probably draw a similar comparison if I looked at how our government runs, but I'll save that for another post.
The real tragedy in not recognizing this reality is missing out on "good business deals" over a quest for the best deal. Most people I've met or worked with over the years bragging about how great a negotiator they were, more often we're just throwing up the warning flag letting me know to watch out for delays and missed opportunities at a cost of satisfying their egos. The real lesson should be focus on what you want to accomplish and understand the costs; then decide, do you really want to succeed at business, or just in attempting based on false expectations. If the deal is a good one, everyone should be happy in the end and looking to for more.
Price, quality, delivery...pick two.
I took a class in college in communications and the professor introduced the course with an opening statement that hit home with me, and has impacted my communication over the years; he said, "You spend the majority of your educational life learning how to read, write, and speak...but, did anyone ever focus on listening?"
Odds are if you're like me, listening was not the focus of your educational experience, but the most critical component of communication too often overlooked and not performed effectively.
For example, how many times do you say, "What did you say?" over "What did you mean?" There's a big difference, and the second question is essential to the process of active listening. If you are really listening, you're not necessarily accepting what was spoken (or written) as the intent; rather, you are reflective and exploring the content in order to capture affirmation. Listening is a process, not a single action, and doing it well will often help avoid conflicts and unnecessary actions; both in your professional and personal life.
Active listening involves a few key steps, interestingly enough, steps I used as a parent often when trying to assure my kids (when they were younger) understood what I was saying:
The same is true if you're speaking, in other words, don't assume people understood what you said; make sure by following the same process above, just start with asking the person to repeat back to you their understanding.
Communication is not just an exchange of words, and if someone says to you, "I heard what you said," make sure they understood what you said - the impact and consequences could be significantly different from the original intent.
Words don't have meaning, people do...listen, it's not a secret.