What ails our retailers? Retailing with our eyes wide shut

business strategy, process, solutionWhen a group of auto executives returned from a visit to Japan in the 80’s one confided to Peter Senge (world-renowned consultant, academic and author The Fifth Discipline) that they were taken for a ride because they weren’t shown the real factories. One executive told him: “They did not show us the real plants. There were no inventories in those plants. I have been in manufacturing for over thirty years, and I can tell you those weren’t real plants.”

He did not realise that he had witnessed real plants without inventory because that is how Just-in-time production systems worked.

Albert Einstein once wrote: “Our theories determine what we measure.” He was right, because the evidence pointed to theories of relativity and quantum mechanics for many years – before it was ‘discovered.’

This is a universal problem, captured in the fables. We have all read the story of the Emperor without Clothes.

People did not see the Emperor for what he was.

This raises pressing questions for these uncertain times:

What do we see? And what is there really to see? Are we merely seeing what we want to see?

  • All the evidence points to the EMPLOYEE being the most important stakeholder, but we hear, see and believe it is the customer.
  • All the evidence point to retailers not meeting customer needs being the cause of the failures, but we hear, see and believe that it is ‘online’ that is causing the problems.
  • All the evidence point to the fact that we should embrace, even reward, failure, but we are congenitally incapable of admitting failure, never mind celebrating it.
  • All the evidence point to the fact that people don’t buy on price, but every promotion is a price-promotion and we seem compelled to keep discounting.

What does this flaw in our nature mean for the things we (think we) believe on all the topics we need to address in order to build sustainable business success? What does the evidence say about brand, markets, margins and distribution?

The reason we come to believe in some of the things we do, is because once upon a time they worked. But we ended up treating them as a magic formula revealed by ‘our experience’, when in fact they were just a set of conditions that applied at a point in time.

The challenge with dealing objectively with our assumptions, heuristics and mental models, is that they are essentially self-reinforcing: we see what we want to see, creating a confirmation bias that eventually solidifies into unshakeable beliefs.

It is time-consuming, difficult and it may even mess with our sense of identity when we start questioning long-held beliefs. There seems to be very little incentive to embark on that journey. The only reward will be discovering the truth and in the era of ‘alternative facts’ the truth seems to be over-rated.

The reason this is all so hard is because, forgive me for being blunt, we lie to each other and to ourselves.

Some people keep two sets of books: a real one, and one for the tax man. We do the same thing with our beliefs:

We have espoused theories of how the world works. The theories and explanations are offered to all who care to listen. This is what we SAY we believe and tell others what we believe.

Then we have our actual theories of how things really work. Which we don’t share for fear of ridicule or a desire to avoid conflict or whatever.  This is what we ACTUALLY believe.

What are leaders supposed to do about this?

Like any ‘change’ initiative, the starting point is that of ‘mindset’. Leaders need to develop a different mindset about their company.

When a company is run by people with a management mindset, the focus on planning, organising and controlling.

When a company is run by leaders, the focus and energy is directed towards establishing vision, growing a culture and promoting an openness to learning. You know a company is run by a LEADER by culture that reveals a willingness to challenge existing mental models.

Managers treat their companies like organisations, leaders treat their companies like an organism.

And that is a difference real leaders will know is worth thinking about.

Dennis Price: Co-Founder at WWW.YEARONE.SOLUTIONS

Comments

6 comments

  1. Paul Fetterplace posted on May 25, 2017

    Aah Dennis - always controversial and questioning the status quo. Good to have you back as a contributor. Give me leadership with vision ahead of management. reply

    • Dennis posted on May 25, 2017

      Cheers Paul. reply

  2. Brad Shefelbine posted on May 25, 2017

    Brilliant, biting and truthful (in both the factual AND philosophical sense). CEO to CL(leadership)O, CV(vision)O? Necessary if not in title then in thought process. reply

    • Dennis posted on May 25, 2017

      Nice words - thanks :) Brad reply

  3. Montague Tigg posted on May 26, 2017

    I like the frankness of your article. It's very well written too. But it would be great to see the evidence that customer are less important 'stakeholders' than employees, and that these customers don't buy on price. Dennis, I encourage you to visit Costco at about noon tomorrow. What you will see is happy customers buying quality goods at low prices, and well-paid store staff keeping things organised, answering questions and working efficiently. This is how every retail fortune has been made in Australia. If Sidney Myer were to come back from retail heaven to walk around the elegant, lifeless Docklands headquarters of his namesake store this afternoon, he'd shoo them all up Bourke Street, where they could sell something for him, rather than talk about stakeholders in front of a Powerpoint. In the Costco/Amazon world, you've got to be as good as the world's biggest retailers. That's a tough ask, so you better do something really, really well. reply

    • Anette Jansz posted on May 29, 2017

      Well, this is the problem with retail thinking in Australia! We are way to driven by price and think this is why the customer shop at certain stores or channels. Costco, Kmart, Amazon etc are not succesful because they sell cheap product - they are successfull in business strategies. Other companies that are highly succesfull selling low price products like Ikea and H & M salute their success to good design, latest fashion, flatpack, controlled logistic and sustainability. The do not promote themselves as selling cheap product! reply

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