Where next?
Figuring out a strategy for change
This is the second post in a series inspired by discussion with the team at Barracuda Search, who are also our sponsors for this series of posts, keeping Moving Tribes free for you to read.
The argument we are building is that there are some key steps you need to go through in order to ensure that your business survives and thrives in a rapidly changing business environment.
The first, which we explored last week, is to make sure that you spot when it is the right time to consider changing course:
If you’ve not read that post yet, I’d consider looping back and starting there. Business history is littered with examples of companies either waiting too long, not realising that they should be changing course, or moving too early and ending up chasing all sorts of silly initiatives. Recognising the right time to change is a key skill for a leadership team.
Once you’ve done that, however, the obvious next question is what that change should be. Every business is constantly surrounded by options - there will be new technologies being pushed at you by hungry start-ups trying to snag a big reference client.
There will also be trendy ‘of the moment’ bandwagons that every consultancy is hopping on to. I note with some amusement this article from the New York Times pointing out that there are more consultancies making big money from Large Language Model AI (e.g. ChatGPT) than there are technology companies actually producing them! Anyone who remembers Y2K and countless other technology news stories will recognise the phenomenon.
So amidst all that noise, how do we decide where to invest our time and money in evolving our business? Should you make a big play in a technology like AI or robotics? Should you develop and launch new products in spaces adjacent to your core? Should you try to add a service layer or subscription model to your regular retail operation? Should you expand internationally? Or should you diversify completely and start taking your brand into new and uncharted territory?
Here are some approaches you might use to figure out the answer for your business:
Be guided by customer insight, not led by customers
It is an old adage that if Henry Ford had been guided by focus groups, his customers would have wanted faster horses for their carriages, not a motor car. That’s an important bit of context to bring into your own research with your customers. At a surface level, a focus group with customers will often generate only banal feedback like “I’d like it to be cheaper and to work better”.
But listen more carefully and all sorts of interesting insights emerge. Explore how your customers actually use your products, for example, and you will often find them inadvertently giving you all sorts of helpful input. When do they choose to buy from you rather than your competitors? What alternatives do they use when they can’t access your products? What changes have they made in other parts of their lives that might be relevant to your future?
Many retail brands, for example, comforted themselves for far too long with literal feedback from customers saying “I can’t imagine buying shoes/clothes/whatever from the internet”. If they had listened, however, to the evangelical excitement with which those same customers talked about how they bought all their books and consumables from Amazon, they might have thought more deeply about the future of the internet for their own businesses.
Build from a deep understanding of what your business is really good at
Why do your customers buy from you? That is the question that underpins almost the whole of Reinventing Retail, my first book. Only by really understanding the role you play in the value chain of your products, and the lives of your customers, can you truly understand, protect and grow the source of your profits.
It is, for example, a deep understanding of their role as an accessible and not too snobby guide to wine for their largely middle-class customer base that leads Majestic Wines to invest so much in training colleagues, running events for customers and most recently investing in buying a chain of wine bars to showcase their products. None of those activities is, I suspect, particularly profitable measured on a stand-alone basis but together they add up to a ‘friendly expert’ customer positioning that is core to the business. If they continue to drive their new initiatives based on that insight, they won’t go far wrong.
Conversely, some of the raised eyebrows at the strategies the John Lewis partnership have pursued in recent years come from the obvious mis-match between the projects and our understanding of what JLP is really for. As a similar “Middle England”, “friendly expert” kind of business, cutting back on investment in colleagues in stores whilst pursuing a strategy to become a landlord just sounded to most people like it was building on the wrong insight. “We own some property” is a pretty weak base to build from, whereas “the whole of Middle England loves us” seems like a better starting point.
Don’t be afraid to be a fast follower
Finally, if there is a generalisation to be made from looking at business change programmes, it is that it is rare that the first-mover is the only one to capitalise on the insight. There are plenty of businesses out there who have made good returns from simply noticing something a competitor has done successfully and then implementing some version of it themselves.
That is often harder than it looks. There is a certain feeling of wounded pride in implementing something a competitor has already done and teams can resist doing so as a result. There is also a very well documented tendency for businesses to observe something that works elsewhere but then try and customise it for themselves to such an extent that they massively increase the implementation costs and risk butchering the profitability right out of it.
Sometimes the answer is simple - there is an initiative out there, it is working in our industry and we should just get on with implementing it ourselves. Comparison with others can, of course, lead to mediocre me-too businesses if it is over-used, but it is also a cracking source of profit-driving ideas.
However you generate your plans for change, whether from customer insight, a deep understanding of your own brand, copying a competitor or some other source, there is another challenge in front of you - how to actually get your change programme implemented successfully.
That’s something we will be exploring here next week - see you then.
P.S. Again I want to acknowledge gratefully that this post is free for subscribers thanks to the generous support and partnership of the team at Barracuda Search.
