7 most expensive words in business

Case Study: Competing in Retail

The Advancing Leadership Blog

By TEC Canada, September 23, 2014

By: Toronto TEC Chair, Richard Peters

The retail industry and retail strategy have been major influences on the marketing and sales operations of a number of the companies with which I have been involved. I marvel at the innovation and creativity shown by some small retailers in the face of what may appear to be insurmountable competitive threats from much larger players. Probably the largest single threatening development facing small retailers are the “big box stores” the most notable of which is Wal-Mart and the niche market “category killers” such as Best Buy and Future Shop in the technology retail sector.

I want to share a few examples, which I believe,  you will find to be inspiring and motivating competitive advantage stories. These are cases where small retail owner/operators have grown and prospered by turning potential adversity into opportunity at a time when their peers were folding their tents in face of what they perceived as impossible odds.

As I write this case study, I am reminded of the bestselling book entitled “Who Moved My Cheese?” If you have not read this book, you must. 

CATEGORY KILLERS
I have spent over 10 years helping software, hardware and internet organizations brand and market their products and services. In that time,  I dealt with dozens of retailers who either exclusively or primarily sold computers and related technology. As this industry started to consolidate “category killers” such as Best Buy and Future Shop became the nemesis of small technology retailers.  Aggressive pricing and extensive product selection caused numerous smaller retailers to close their doors.

Here are few examples of small IT retailers who through innovation managed to survive despite the odds.

1. As Best Buy and Future Shop were expanding and smaller retailers were closing their doors, one of our IT retailer’s was actually opening. If memory serves me correctly, he had 3 or 4 stores. I noticed that they were located very close to if not directly across the street from a Best Buy or a Future Shop. I asked him about the wisdom of this strategy. His perspective was that the big guys were either an opportunity or a threat and he chose to capitalize on viewing them as an opportunity

His competitive strategy focused on what he perceived were weaknesses or deficiencies in the big store business model. These were:

• When a consumer purchased a computer, TV etc. from a big store, they would invariably end up being sold cables etc. to accompany their major purchase. Often the additional cost of these ad-on items could be a few hundred dollars.  The store owner advised me that the prices being charged for these cables etc. were significantly marked up from what they had originally cost the store. Actually, the cables etc. were relatively inexpensive to the retailer but provided a significant margin opportunity. The same, by the way, is true of the “extended warranties”  often purchased when someone buys a new computer etc. These warranties represent significant bottom line revenue for retailers.
• This store owner began to advertise that, at his store, the cables etc. were included in the purchase price of any equipment. The owner noticed that while his big ticket items prices were fairly competitive with the big stores, his clients were willing to pay a little more for these major items to avoid the additional cost of the add-on items. In many cases, despite the fact that some of his big ticket item price was higher, when the customer  factored in the “free” cables and accessories, that they would be required to buy a “big store” , the total cost was less at the small retailer.
•  Another competitive advantage was his “knowledgeable staff” and outstanding customer service.  In his stores he hired what he referred to affectionately as “nerds” who lived and breathed IT. The big stores on the other hand were less inclined to do so. The big operators offered clients access to in-store tech services such as “Geek Squad”at Best Buy who, if they were unable to deal with your issue in the store would visit your home or office and, for an hourly fee, would resolve whatever issues you had.  The smaller operator also offered to send a technician to a customer’s home “free-of-charge” to help them setup whatever new equipment had been purchased as well as resolve issues with existing equipment. He also opened his stores earlier and closed later than the big stores. He encouraged people to stop by on their way to work and on their way home.

 The retailer found that people quickly discovered where he was. Word-of-mouth and referrals were a significant source of business. Once new customers did business with him, he found they tended to check with him before visiting the big stores for future purchases.

2. Another IT retailer had his stores located in close proximity to supermarkets. He noticed that men were less inclined to want to spend time shopping with their wives or partners if they had someplace to which they could easily escape after parking the car and kill time while their other half was shopping. He trained his staff not to pressure people to buy but to create an atmosphere where people could come to relax, check out the equipment, have coffee, relax, ask questions and feel comfortable. He found that he developed a dedicated clientele who felt a loyalty to his store where they had developed relationships. They were even willing to pay slightly higher prices to shop there because of the level of service, customer relationship practices and convenience.

THE WAL-MART ADVANTAGE
Media and public interest groups have ensured we are well acquainted with the plight of small retailers as they face the “big box” effect caused by large operators moving into their markets. Wal-Mart, of course, has come to define everything that is evil about these big box operations. However, there have been instances where smaller retailers have risen to the challenge and turned even Wal-Mart adversity into opportunity.

A few months ago I read a story about a small “general merchandise” store in Alberta which had the misfortune to be located across from a new Wal-Mart location. The store had been operating for years prior to the Wal-Mart opening its doors but the effect of discounts and expansive product lines was taking its toll on the small store’s business. The owner decided that closing her doors was the final option but not the only one. She looked for opportunities that her new neighbor might provide. She came to realization that by altering her product line to consist of products not sold in Wal-Mart, she could take advantage of the traffic coming to Wal-Mart to also visit her store.

The Wal-Mart parking lot became her store’s parking lot and her business did better with the Wal-Mart next store than it had before the Wal-Mart arrived. 

CONCLUSION
In all these cases, the store owners looked out their store windows and did not see potential customers shopping somewhere else but rather people arriving in their neighbourhood looking for opportunities to spend money.

The challenge, as these store owners saw it, was to redefine the terms of competitive engagement and they chose to “complement” and “supplement” rather than compete.
photo credit: Tau Zero via photopin c

Are Your Employees Connected To A Common Good?

They should be. A new study reveals the value in unifying around goodness.

What do you think your employees really have in common?

If you're honest with yourself, the answer is likely that it’s not much beyond an interest in your company. That shouldn't come as a surprise since employees come from all walks of life. It's important to have diverse thinking and interests, but shared values and a common purpose are also a must to foster a cohesive community of people within the walls of an organization. Walk from the finance department to the marketing department, from sourcing to engineering and more, and you'll see the differences that exist. Even within a small company, departments can divide the whole if not anchored in the organization’s common purpose and operating values.

As a result of globalization, many companies have employees located in different cities, states, and even countries, allowing cultural differences to be magnified. Even as remote workspaces and mobile technologies allow for more physical separation, society as a whole is searching for ways to create unity around common and shared passions. A study released in 2013 shows that 37% of consumers and employees want to feel the unity that stems from local causes, 35% want to feel it nationally, and 28% globally. Humanity has a shared desire to unite our communities, our countries, and the people inside of companies.

Common good makes for good business.
Companies with a social conscience that act, innovate, and mobilize around social needs are no longer unique revolutionaries--they are part of the new normal. When executed well, the power of engaging employees in and around a common cause that's connected to the core business is a very powerful force for good for both the business and the world at large. We work alongside major corporations, social entrepreneurs, and nonprofits, and there is absolutely no shortage of inventive approaches to engaging in the common good. Ingenuity that connects the resources of a corporation to solutions that deliver an impact are plentiful, but at times we see corporations struggle around ways to clearly articulate a strategy that makes sense to stakeholders and key players.

Common good gives profits a greater purpose.
As part of our strategic work, I recently met the founders of Profits4Purpose, a technology business that helps companies create a united and simple giving platform. Their solution is built on the belief that there is power in connecting relationships and sharing experiences, and by empowering individuals through their platform, they help companies increase their social impact on the world. Profits4Purpose started their business to accelerate and simplify the process for businesses that want to engage their employees in social good.

Profits4Purpose uses a "match.com" model in which they connect employee interests with needs and opportunities in communities. They also empower employees to create personal-interest groups that others can join. The platform enables companies to create a customized workplace giving destination, providing employees with personalized giving schedules (and personalized trust funds). They also provide tools that match employee interests and skills with local nonprofits and streamline all grant, sponsorship, and donation requests. Users receive access to a dashboard with thousands of volunteer opportunities, the ability to create personal giving foundations, and activity walls displaying the impact being made in real time--all delivered with a simple approach to creating relational and innovative common wealth.

Recently, Staples partnered with Profits4Purpose to offer their employees a voice as to where corporate donations are shared. Through their platform, Staples employees see their impact on a local and global level. In a company that is 100,000 strong, the unified voice rings loudly. 

Mobilize your employees for the common good.
If you look at the world of business today, it seems that most organizations fall into one of the following groups: those that have seamlessly connected their business to a common good and a dedicated cause, such as Warby Parker, FEED, Toms Shoes, and Krochet Kids. And companies like Target, Whole Foods, and Southwest Airlines that have a foundation or a focus on social good that is directly linked back to the communities they serve. Then there are other companies that are actively giving back and helping to make a difference in the world--but are not inventive in how they connect their common good to their internal culture or consumer community.

Regardless of which group your company falls into, there's always an opportunity to connect and engage employees at a deeper level to ensure that the pursuit of the common good is driving common wealth. 

Connecting to the common good makes common sense.
It's clear that today’s emerging workforce wants to make more than a living, they want to make a difference--and this is especially true for employees between the ages of 20 and 35, who will contribute to the common good with or without the support of their employers. A technology platform like Profits4Purpose can help ensure that employees get the support they need from their employers to help make a positive impact on the world. 

Shawn Parr

Shawn Parr is the Guvner & CEO of Bulldog Drummond, an innovation and design consultancy headquartered in San Diego whose clients and partners have included Starbucks, Diageo, Jack in the Box, Taco Bell, Adidas, MTV, Nestle, Pinkberry, American Eagle Outfitters, Ideo, Sony, Virgin, Disney, Nike, Mattel, Heineken, Annie’s Homegrown, Kashi, The Michael J. Fox Foundation for Parkinson’s Research, CleanWell, The Honest Kitchen, and World Vision.

you are not going to succeed....

What makes a winning team?

David Reeve CMgr MCMI

Most of us at some point in our lives watch a team sport. It might be only once every four years during the olympics or your might be an avid fan, whether it be football, athletics, hockey or motor sport. For me, it's Formula1 and with the start of the new season only 2 weeks away, it got me thinking as to what makes a winning team. The answer is of course complex and involves lots of different things, a key one of which is leadership. For me, however there are 3 key elements to building a winning team: 

Knowledge
Your team need to have the knowledge to do their job. This applies both as individuals and as a team. Each individual needs to know what their role is and to have the knowledge and skills to do that role. Take the example of mechanics in motor sport. Each mechanic has to be able to work at the top of their game whether that be re-building the engine or changing a wheel. They also need to know what everyone else does and rely on others to complete their tasks. This means trusting everyone in your team. 

Trust
In my view creating and mourishing mutual trust begins with honesty. If as leaders we display honesty in the way we deal with and talk to the people that we lead, then we set the tone within the area of the organisation that we have direct responsibility for. From experience, this then encourages your team members to be honest in return and builds mutual trust within the team.

Then the challenge, unless you are the CEO of course, is to influence upwards and set the tone and expectations of how you operate and therefore how you expect to be treated. Given time and work on relationship building, if you are honest with your managers, most people will accord you with the respect that you clearly should be accorded, which will ultimately create and nourish mutual trust. 

Communication
Communication underpins everything within a winning team. For your team to have the knowledge to do their job, they have to learn. Learning, whether it is formal or informal on-the-job training requires communication. Trust is built up over time and through experience that someone does what they say they will do. Communication is a fine art, and a post in itself, but is crucial in building a winning team. Great communication will help develop your team and build their knowledge. It will also help you build trust which in turn improves performance. Poor communication on the other hand will destroy everything that you have been working for and can turn a winning team into a losing one.

Disrupting Yourself

If you aren't disrupting yourself, someone else is.

In this blog, I want to teach you about a powerful tool you can use to disrupt yourself.

Your survival as a company and as an entrepreneur depends on it.

It all began at Lockheed in World War II…
In 1943 the defense department called Kelly Johnson, the head of engineering at Lockheed, with an impossible task.

The German fighter jets had just appeared over the skies in Europe and America desperately needed a counterpunch.

Johnson accepted the critical mission and designed, tested and delivered America's first jet fighter, the P-80, in a record 143 days.

Today you can't even negotiate a contract in 143 days, let alone deliver a final product!

Johnson's success and his team (Lockheed's Skunk Works) changed the course of the war.

It also created a philosophy for rapid innovation which is still used by the most innovative companies today.

"Going Skunk": The 4 Secrets to Innovation

Today, "going skunk" is often used to describe the creation of an especially enriched environment that is intended to help a small group of individuals design a new idea by escaping routine organizational procedures.

Beyond Lockheed's Skunk Works, incredibly inventive companies like Google's GoogleX organization use the same principles.

In general there are 4 big secrets to their success that are worth learning and repeating.

Secret #1: Big Goals – Setting Moonshots

Companies do not "go skunk" for business as usual.

They do so to tackle Herculean challenges.

Skunkworks are built around what psychologists call high, hard goals.

Big goals lead to the best outcomes -- If you want the largest increase in motivation and productivity, then form teams around "moonshots," as Google calls them.

Big goals significantly outperform small goals, medium-sized goals, and especially vague goals for two reasons: focused attention and increased persistence.

The team is more willing to try again if they fail the first, or second, or third, or one hundredth time.

Secret #2: Extreme Isolation

Steve Jobs famously said, "it's better to be a pirate than join the Navy," as he hoisted a pirate flag outside the building housing his Mac development team.

This may be the most important key to success in a skunkworks.

You have to wall the skunkworks off from the rest of the corporate bureaucracy.

Isolation stimulates risk taking, encourages weird and wild ideas, and acts as a counterforce to organizational inertia.

Organizational inertia is fear of failure writ large.

It is the reason Kodak didn't recognize the brilliance of the digital camera, IBM initially dismissed the personal computer, and AOL and Radio Shack barely exist anymore.

Astro Teller, the director of Google X (Google's skunkworks innovation lab), says, "In any organization, the bulk of your people will be climbing the hill they are standing on. That's what you want them to do. That's their job."

"A Skunkworks does a totally different job. It is a group of people looking for a better hill to climb."

"This is threatening to the rest of the organization. It just makes good sense to separate these two groups." 

Secret #3: Rapid Iteration – The Importance of Rapid Feedback Loops

As my coauthor Steven Kotler likes to point out, "the road to BOLD is paved with failure."

This means it is critical to have a strategy in place to handle risk and learn from mistakes.

As the unofficial motto of Silicon Valley goes, "Fail early, fail often, fail forward."

Instead of launching a finely polished gem, companies now release a "minimum viable product," then get immediate feedback from customers, incorporate that feedback into the next iteration, release a slightly upgraded version, and repeat.

Instead of design cycles that last years, the agile process takes weeks and produces results directly in line with consumer expectations.

As LinkedIn founder Reid Hoffman says, "If you're not embarrassed by the first version of your product, you've launched too late."

This is rapid iteration.

Trying out crazy ideas means bucking expert opinion and taking big risks.
It means not being afraid to fail – because you will fail. 

Secret #4: Intrinsic Rewards

For most of the last century, science focused on extrinsic rewards, that is, external motivators.
These are "if-then" conditions of the "do this to get that" variety.

With extrinsic rewards, we incentivize the behavior we want more of and punish the behavior we dislike.

For example, in business when we want to drive performance, we offer classic extrinsic rewards: bonuses (money) and promotions (money and prestige).

The problem is: a growing plethora of research shows that extrinsic rewards have greater costs than benefits.

Once people's basic needs are no longer a constant cause for concern, extrinsic rewards lose their effectiveness and can crush the high-level, creative, conceptual abilities that are central to current and future economic and social progress.

Intrinsic rewards, meaning internal emotional satisfactions, become far more effective.

The secret to high performance is our deep-seated desire to direct our own lives, to extend and expand our own abilities, and to fill our life with purpose.

Gaining autonomy, mastery, and purpose are motivators enough to make us work to our highest potential. 

Being Bold, Going Skunk

Since Lockheed's massive success, everyone from Raytheon and DuPont to Walmart and Nordstrom has gotten in on the skunk game.

In the early 1980s, Apple cofounder Steve Jobs leased a building behind the Good Earth restaurant in Silicon Valley.

He stocked it with twenty brilliant designers and created his own skunkworks.

The result – the world's first Macintosh computer.

This approach can by applied to any business, group, organization that wants to innovate and go bold.

Written by

Peter Diamandis

Rock Bottom......