A very wet Foodie Friday here but that won’t deter me from posting a few thoughts about what I think is a post-value world. What I mean by that is that value seems to be more of a given today that it did a few years ago. I also hope by now you’ve learned the difference between value and cost because your customers certainly have.
In the food business, you see this playing out in spades. Everyone has a deal, whether it’s $1 menu items or $5 foot long subs or free cheeseburgers from using an app to order. I suspect that many of these items are loss leaders. They certainly can’t be maintaining the margins which are already slim in the restaurant business. They’re designed to build traffic and that traffic will buy other, more profitable items.
The problem with this is the restaurant business is one where the supply has outstripped the demand. Chain restaurants are growing faster than the overall population and there aren’t enough hungry folks out there to support them all. Because deals are so prevalent, it actually frees the consumer to decide if they place more value on the price of the meal or if they value higher quality ingredients or better service or just the overall dining experience an establishment offers. More often than not these days, the price is less of a concern. Why? Because everyone’s got a deal!
What does this mean for your business? It means you’ve got to continue to get beyond thinking about cost in terms of how your customer values your product or service. The health of the business depends on more than a lot of customers. Fewer, more profitable customers seem better to me than a lot of slim-margin ones. Ask K-mart, whose profitability peaked in 1992, if the low-margin, high volume strategy can work over the long term. Someone can always compete on price (Walmart).
The “deal” I try to offer to my potential clients is the highest level of value. That value is defined in THEIR terms, not mine. If all they’re after is a low price, I’m probably not going to be working with them. If what they want is a profitable result that advances them to their goals, well, that’s my deal. What’s yours?
I went to bed last night after watching my favorite weather forecaster give a rather dire outlook for this week. When I moved to North Carolina I opted for hurricanes over blizzards, I guess, and now it appears that one is headed right for us.
I ran out earlier to pick up a case of water bottles just in case the forecasts are accurate. The local Walmart had nary a bottle anywhere, and the long aisle of empty shelving reminded me that I wasn’t the only person who had this idea four days ahead of when this thing is supposed to pay us a visit. I’ve got lots of ice to hold the food and lots of wine to hold me so I think I’ll be fine.
On the drive home I thought to myself that it was pretty cool how everyone is going about their business and preparing. There weren’t any D batteries at Walmart either and there were lines at the gas stations I passed. People are trying, as we were constantly told in the Boy Scouts, to “be prepared.” Which leads me to today’s screed.
There is a hurricane headed for your business. It might not be on your radar yet or you may have red flags raised over your beaches, but you can rest assured that at some point a massive, devastating storm will hit you. The thing is that you need to have a disaster place in place and preparations made long before that time arrives. Was Chipotle ready for the massive e. coli outbreak? It almost destroyed them and they still haven’t recovered. What if the power grid fails for whatever reason and all of your refrigerated inventory must be thrown out? What’s the plan to deal with that and are there financial plans in place to recover?
You need a crisis response team and a disaster plan. Your key players from all your relevant business functions – operations, public relations, marketing, quality assurance, legal, etc. – have to have been briefed on the plan long before it’s executed. I’ve written before about how my organization’s web servers failed after 9/11 due to a lack of dust filters that forced the shutdown of the emergency power we were careful to have at our disposal. When the crisis had passed, we rewrote the disaster plan to account for yet another “just in case.”
Hurricanes happen. The question isn’t how to prevent hurricanes but how best to prepare and recover from any damage they cause when they do. I’m ready for this one. Are you?
Foodie Friday, and today we’re having a think about the food of the future. I don’t think it’s news to anyone who pays the least bit of attention to the world that humankind’s ability to support itself is in peril. CNN said it well:
We’ve gotten ourselves into some trouble. Our dining habits are a big part of the problem. The average American male consumes 100 grams of protein daily — almost double the necessary amount. This overconsumption isn’t sustainable. The United Nations projects food production will need to increase as much as 70% by 2050 to feed an extra 2.5 billion people. To survive, we need to reinvent the way we farm and eat.
Exactly, except that some of that reinvention, while packed with nutrition, is…well…gross. I know that I’m applying my American diet standards here but how would you describe eating bugs or algae? We have plenty of both, both are sustainable sources of protein, and both reduce the impact we’re having on our planet. Cricket anyone (and I don’t mean the game!)? How about a nice plate of nannochloropsis?
There’s a great business lesson in this. To understand it, let’s look at another food that was once anathema to most Americans: the tomato. That’s right. Until the early 1800’s, the tomato was grown purely for decoration in this country because it was considered poisonous. What happened to change its reputation and make it a mainstay of our diet? There are several theories, including one involving Thomas Jefferson’s promotion of dishes using the tomato. I think it has to do with immigration and the fact that European immigrants used the fruit (you know it’s a fruit, right?) in their cooking. Whatever it was, people overcame their fears and began consuming tomatoes en masse.
If I were marketing bugs and slime (OK, it will probably be protein derived from those things made into other food products), I’d do a few things. First, I wouldn’t deny that there might just be a perception problem. No brand can deny its past. I would aggressively try to control the conversation and the message. That means a lot of marketing, especially through influencers and social channels. I’d research the heck out of consumer attitudes on a continual basis and I’d avoid making emotional responses to misperceptions, focusing on the data. Mostly, I’d do everything I could to get the products sampled and I’d use the testimonials along with the overall message that these products are saving the planet by decreasing the need to rely on other protein forms that are inefficient at least and detrimental at worst to the environment.
When I was a kid, the notion of eating raw fish in this country was nonexistent. I’ll bet many of you did just that this past week. There just might be a bug in your future once some smart marketers get to work. What do you think?
If you’ve been wondering where the screed has been for the last couple of days, the post below from 2009 will explain everything. Originally titled “The BOA,” the “meeting” I’m attending is an incredibly valuable gathering both for me and for my clients because it helps me be a better advisor. Enjoy!
I leave tomorrow morning on an annual trip I take to Myrtle Beach. In theory, it’s a golf outing but it’s more of a 5 day stay in a rest home getting my batteries recharged. 13 of us go, 12 of whom play golf. The other guy is a “social member” – most golf clubs have them – who enjoys the non-golf activities – cards, movies, and general guy banter. Like “Fight Club“, the first rule is we don’t really talk about it. However, what I can talk about that these are the guys whom I trust, to whom I can turn for advice, and who are honest – often brutally so – with me about everything from my golf game to my attitude. For all of the social networking tools available out there, nothing beats the face to face contact with this group for me. There is a business lesson in this as well.
Every businessperson needs a “board of advisors” for themselves, not their business. While your significant other is a great start, like a business BOA, you need multiple diverse points of view. My group has a few lawyers, an accountant, a few “money” guys, a restaurateur, another digital media expert – you get the idea. Ideally, these are people who can get past how you say things and hear what it is you’re saying. They are comfortable enough with you to know that their candor will be taken in the open, supportive spirit in which it’s offered. When their advice isn’t taken, they’re not offended and are smart enough to hold their tongues when it turns out their advice was right.
So off I go to meet with my BOA. I’ll try to keep posting over the next few days but if I don’t, please understand it’s because I’m in a Board meeting. When is your next meeting? Do you have a board to gather?
Before the Thanksgiving break, I did a free consultation with a prospective client (you can get yourself one too just by asking!). We talked about where the business has been and where he thinks it should be going. The problem we identified was that much of his information was feeling-based and not fact-based. I can hear the frequent readers of this screed preparing for yet another rant on the value of data, so let me surprise you a little today.
(Photo credit: Wikipedia)
The hardest thing in business is seeing over the horizon. Oftentimes we need to shut our eyes and project ourselves forward in time, carried on the magic carpet woven from what we know so far and our own intuition. The reason is that in today’s business climate the future is often very different from the past and the analytics that reflect past behaviors have to be projected forward in the context of what might be the future environment. The more ambiguity the future holds for your business the greater the reliance on your own gut.
The issue for this business is that the leadership team was either young or inexperienced in business (they are scientists, mostly) or both. That’s why it seemed as if bringing in experience and intuition (that would be yours truly) made sense. You might not be in that situation but you might be feeling uneasy about your firm’s future direction even as you act in accordance with all the business measures you have in place.
Please don’t mishear me. If you have any sort of digital presence (website, social, email, etc) and aren’t using your analytics to inform you about traffic and how users are engaging with you, you’re not doing your job. If you don’t know or understand those things, find someone who does. If you can close your eyes and feel your typical customer, that’s fantastic, but if the reality of your data doesn’t match your feelings, you need to try again. You can’t let run a business making feeling-based decisions alone. Don’t over-think, but don’t under-inform. OK?
I would be remiss if I didn’t mention the passing of B.B. King. While I have been to hundreds of concerts in my life, at one point I had seen B.B. King more than anyone (yes, even Springsteen although that’s no longer true). He has been rightfully honored over the last few days by every guitar legend – Eric Clapton being the most prominent – as having been a huge influence on their music. When he wrapped his fingers around Lucille, his guitar, he could say more in three notes than most guitarists can say in an hour.
(Photo credit: Wikipedia)
Of the dozens of times I saw him, one night in particular stands out and as it turns out there is a business point to be made as well. B.B.’s shows always began with the band playing a number or two and then the master would hit the stage. This particular night he played his first song and began his second when a string broke on Lucille. It would have been incredibly easy for him to have signaled the band to stop because it was very apparent that a string had snapped. Instead, as he continued to sing the lyrics, his right hand reached into his jacket pocket and out came a few strings. Singing all the while, he proceeded to change the string, tune it as he played, and finished the song without missing a beat. The audience stood as one when he finished, not because the song was a show highlight but because of the master class we had just seen.
The business point is one that I think we all know. Strings break in all of our businesses from time to time. The customers don’t really care even when they’re aware that something is amiss. The broken string is your problem, not the customer’s. How prepared are you? Can you go about your business of providing an uninterrupted product or service of the expected quality or do you stop the band and make the customers wait? B.B. King didn’t play a different guitar every other song. He stuck with Lucille, so waving a roadie out to swap instruments wasn’t an option (and I could go on here about loyalty and consistency but you’re already there). He probably had those strings in his jacket every show and rarely needed them (this was the only time I ever saw them come out in dozens of shows). Do you have strings in your pocket or are you looking for a roadie to bail you out?
I’m sad The King Of The Blues is gone but thankful for all the joy he gave me and the inspiration he provided to many of the others whose music I love. I’m also appreciative of his professionalism and have learned a little from his broken string. You?