Tag Archives: Sears

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Staying Alive

This will be the third post in an unintended trilogy following my last two on why companies that might appear to be “built to last” may suddenly evaporate before your eyes. In response to those stories (Gone So Soon and 8 Warnings That Your Company Is Toast), I received several inquiries wondering if there were ways to spot an imminent mudslide while there’s time to escape.

Executive turnover is something to watch closely, especially the C-suite. Either too little or too much turnstile rotation can be a warning sign. With no leadership change over long periods of time, a company might become entrenched in its plodding, convinced it knows how to do things so well no seismic shift in the landscape requires reinvention of the company’s ways. When executives are repeatedly jumping ship in under a year, the lack of stability in teamwork, embrace of new ideas, or core strategy might be signaling a torpedo crater in the ship’s hull that can’t immediately be seen underwater. Certain presidential administrations come to mind.

An escalating executive dump of equity holdings will usually light up an analyst’s eyes, but what about yours? If top management is seeking liquidity while proclaiming they are simply reducing concentration and balancing their holdings, ask yourself why now. It’s good to be loyal when there’s a reason to be loyal. Ignoring the siren to go down with the ship will never seem as noble when your colleagues have departed in first class and you are left treading ice water. Much of the dot-com bubble unraveled this way, with most of the stock prices dropping swiftly to zero.

Ever sit in a meeting, listen to a colleague or team of co-workers present an innovative, visionary solution to a core concern the company has long identified as critical to its survival, only to see the framers of the big idea summarily dismissed without adequate explanation? Sure you have, most of us have. Perhaps those framers then quit, go across town and put their concept to work for a competitor, of course without violating their nondisclosure or trade secret agreements, modifying their ideas to a variation on the theme. If you believe they are as smart as they think you are, consider following them. That’s how companies like Intel started.

Do you observe evidence that your company understands its core competency, protects it through a culture of learning, and openly admits its weaknesses as opportunities for improvement? When you go to an offsite, is the point of that retreat an honest evaluation of the company’s strengths and threats, or is the current leadership pontificating on how unlikely it is that your competitors can take your market share? Sears has been dying for decades. I wonder when in each of the past years they thought they were winning.

Are you building a project or a company? A lot of people aren’t sure. Most startups begin with a product offering, but if the company building that product defines itself too narrowly, it may soon cease to be a company when it is folded into a larger company with a lot of “synergies” found in the combination. If the word “synergies” doesn’t ring a bell for you in the world of mergers and acquisitions, it usually means overlapping functions that are removed as redundant costs, possibly you. Look at the string of product builders that companies like Microsoft and Google synergized throughout their history. How many of them can you still name?

Are analytics, diagnostic evaluation, empirical assessment, and primary research core to your company’s self-evaluation? Are key decisions made on gut instinct or debated with facts? Ask yourself if that’s what the top leaders in your company say they want to do or if it’s what they really do. That which gets measured gets done. That which gets quantified gets fixed. If you’re in the room where people are swapping stories rather than interpreting data, you’re probably better off gambling in a casino where the odds are at least known.

Another way to think about this is whether you believe top management in a company is truly focused on staying alive, and whether you can help overcome the challenges to a company you love or want to love. If the decision-makers around you are people you trust who are committed to vetting solutions, perhaps you can be as well. Too often when the axe falls, we acknowledge in hindsight what we should have applied in advance thinking. There are artifacts of knowledge all around you—both positive and negative—if you choose to pay close attention to the reality of your situation.

You can always be pleasantly surprised or devastatingly rocked by good or back luck on the job. Predicting the likelihood of an outcome is a learned task that is likely more tangible than you think.

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But We’ve Always…

It’s December. For those of us who make our living in any form of consumer business, that usually means two things:

  • We have made it through Black Friday and Cyber Monday, with our projections now being evaluated against actuals.
  • In less than a month it will be a new year, where we can either make the same mistakes again or invent new ones.

That leads to two takeaways I would like you to consider before the year ends:

  • Customer behavior tells us almost everything we need to know to be successful in business, particularly when we study data and benchmark assumptions against metrics.
  • We ignore the realities of customer behavior at our own peril, but darn it all if we don’t come up with really good reasons to flagrantly repeat our mistakes with passion and conviction.

How does our eye come off the ball precisely when it is crossing the plate and our bat is in swinging position?

It all begins with three wretched words:

BUT WE’VE ALWAYS.

Perhaps you’ve heard a few of these pronouncements before:

I know our customers complain when we send them too many emails, but we’ve always sent them at least four offers on Thanksgiving Day.

I know our customers don’t trust our pricing, but we’ve always jacked up our regular prices in the weeks before Christmas so we can mark them “50% off.”

I know it’s irrational to cover the cost of free expedited shipping and lose money on every sale, but we’ve always managed to convince our boss that losing money is the only way we can compete with Amazon.

I know our brand promise is what matters most to our company, but we’ve always managed to slip in a few low-quality products with our best inventory to even out our margins.

I know we believe our customers are loyal and have a lifetime value, but we’ve always cut our customer service costs to force our bottom line into compliance with our budget.

Yep, we know what we are doing is wrong, but we’ve always found a way to justify our shortcomings, weak logic, or poor decision-making because we’re out of time, out of patience, or out of energy to argue for doing what’s right.

Earlier this year I attended the third-annual ShopTalk conference in Las Vegas. It had grown 50% over 2017 with more than 8400 attendees. Ecommerce remains an escalating magic buzz word. There were two types of presentations:

  • “People may think our proud, established, vastly well capitalized legacy brand can’t adapt to new technology, but we’ve always been a customer favorite and there’s no reason anyone should bet against us.”
  • “We’re a new brand and will lose our jobs if we don’t succeed, but our investors are betting that if we brainstorm new experiments and focus on customer behavior, the results will tell us what works and what doesn’t.”

Which bet would you place with your own money?

Let me restate the choice:

  • “We’ve been around more than fifty years, we know exactly what we’re doing having coined a business model for hard-won success, we’re a household name, and we’ll still be a household name fifty years from now.”
  • “We have no idea if we’re going to be around in two years, but we’ll take whatever runway we have to figure out how to do what’s never worked successfully before.”

Don’t bother answering—it’s a trick question. The truth is you need some of both to win the long game, some of the newbies and some of the dinosaurs. Yet too many people convince themselves there’s little downside to a buy-and-hold strategy with “forever” companies like GE or GM. They won’t invest in a risky start-up with a funny name and an unproven business model like Amazon or Apple until it’s a fully valued blue chip.

No one knows what companies are going to win in the future, whether cemented or emerging. They all have unpredictable choices to make. It’s supposed to be that way. It’s how new companies are born and old companies die, or old companies are reborn through reinvention. It’s called creative destruction.

My point has nothing to do with improving your stock portfolio. My point has everything to do with recognizing the death knell of an established brand and bringing life or invigoration to a challenger brand.

It can be a fair fight. An established brand can be a challenger brand when it acts like an underdog—when it stomps out the status quo and humbly looks to customers for confirmation or rejection of any working thesis.

I am willing to bet few employees at Amazon or Apple wander the halls uttering the words “but we’ve always” as a response to why they aren’t trying something new. Who knows, maybe I’m wrong, maybe they are becoming slow, cynical, and comfortable that they know what they are doing. I doubt it, but if they are, an opportunity for a challenger brand is out there for the taking.

I’ll bet they said “but we’ve always” a lot at Sears.

I’ll bet they said “but we’ve always” a lot at Toys ‘R’ Us.

When was the last time you said it? Still feeling good about that?

This year’s holiday shopping strategy is already behind us. There’s nothing we can do with history except study and learn from it.

The new year awaits all big ideas, particularly those focused on truly delighting customers with a sustainable business model and a resonating brand promise.

My advice going forward in whatever you are doing?

Eliminate the phrase BUT WE’VE ALWAYS from your company’s vocabulary before it eliminates you.

Erase those three words entirely from all conversation.

BUT WE’VE ALWAYS is defensive, uninspiring, and telling.

Try something instead that hasn’t worked, something that you think might work because you have reason to believe in a thesis. Measure the results. If there’s promise, hone it with precision. If it starts to work, stay humble. Stay inquisitive. Question the potential interpretation of every collected data point. Remember that every successful idea has a life cycle, and a bad idea yesterday might be reformed under changing market forces as a good idea tomorrow.

When an idea works dependably and someone questions it in a future review, just don’t say BUT WE’VE ALWAYS done it that way. You haven’t always done it that way. It had a beginning. It can have an end. What can’t end is innovation.

_______________

Image: Pixabay

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Dear RadioShack

RadioShackGreetings, my fellow nerdy friends. I read with concern last week in the business press that you are closing as many as 1100 stores, following your well-received Super Bowl commercial earlier this year. You are not alone. Sears is closing stores. Staples is closing stores. Quiznos is closing stores. There seems to be plenty of commercial real estate coming on the market in all shapes and footprints. I wanted to write to you because I used to love the RadioShack brand, and I would hate to see it join the other tombstones in the Dead Brand Graveyard. You see, I was a bit of a geek as a kid, still sort of am, mowed a lot of lawns and bought my first CB Radio at RadioShack way back when, then used to love to hang out with the other geeks in the store.

So I wonder if the big-salary strategy teams sitting around the table in your headquarters this modern moment have asked themselves the following ten very personal questions:

1) When was the last time they shopped unprompted as a customer in a RadioShack?

2) What did they love about walking into the store?

3) What did they love about the shelf displays in the store?

4) What did they love about the merchandise on sale in the store?

5) What did they love about the staff in the store?

6) What was in the store that was unique, perfectly priced, or presented so well they couldn’t say no to it?

7) How much did they spend of their own money in the store?

8) Did they tell a friend about the experience and urge that friend to also visit the store?

9) When they got home, did they think, oh wow, I should have bought something else while I was there?

10) Are they actually excited about visiting that store again as soon as they can?

The reason I ask is, I never worked at a RadioShack, but I used to be able to answer every single one of these questions in the affirmative. I was a brand evangelist for RadioShack. I actually loved your brand.

At the moment I have no clue what it stands for, except every once in a while I need an obscure electronics plug or unusually shaped battery, and I drop by because you’re paying top dollar for a great location right between my bank and a sushi place I enjoy. If it pops in my head, sometimes I drop off a bucket of old batteries for you to recycle, and if you have the gizmo I need, I gladly fork over about $3 to $8. The guys at checkout always ask for my zip code for some reason, even though I know you know it, because you used to mail me a catalogue several times a year with cool stuff to come see and at least one great coupon offer, but no one there seems to know me after 40-plus years of stopping by. I’m glad you still have the little wired metal gizmos when I need them, and I wish I could spend more money while I was in the store, but there’s really nothing I need or can’t get online cheaper, and the guy behind the counter doesn’t seem to want to swap stories about weird-shaped neon mini bulbs anymore. I miss that guy, he was a geek like me.

You were once the Tandy Corporation, remember? You sold leather goods. Then you reinvented and became RadioShack, and we geeks thought it was a cool place to gather, kind of like Egghead, before they became rent-free NewEgg. You had the TRS-80 and knew how to load software on it! Are some of those geeks at your conference table? Do they love your brand the way we did–not like, but actually love? If they don’t, are they able to articulate what happened to the magic?  Because if they can’t, and they don’t want to go to RadioShack like a real customer, then why should I? I mean, sure, anyone can hire an agency to do a killer commercial, and you can love a commercial, but that’s not the same as loving a brand. It’s also not the same as a reason to go into your store.

I do believe you have to eat your own dogfood if you want someone else to give it a taste. That’s just me. Call me a simpleton without an MBA, but when I love a brand, and I have reason to recommit my loyalty to that brand time and again, price is only one part of my decision funnel. I want a brand that comes with a promise. What’s yours?

I won’t be writing this letter to Sears or Staples or Quiznos, although I do occasionally frequent those stores, but I did want to share my thoughts with you, because there was a time not long ago when you meant something to me. Like Borders. Like Tower Records. Like Blockbuster. Those old friends are no longer to be found. I wonder if the people sitting around the table in their final year loved their brands as much as their customers once did, or if they just ran spreadsheets and focus tests.

There’s a lot going on in a store; it’s a great laboratory for learning. When there’s nothing going on there at all, you can learn even more.

It all begins with a promise.

Signing off now, that’s a big 10-4.