Tag Archives: Strategic management

South Bye Bye

These are odd times indeed and it’s when we’re under stress that our true nature often shows. That same is true of organizations and that’s often to their detriment because that true nature is often anti-customer. There is an excellent example of this in what’s going on with the SXSW Festival.

If you’re unfamiliar with the South By Southwest festival, or South By as it’s commonly known, this is how it describes itself:

The event has changed in many surprising and meaningful ways since 1987, but at its core, SXSW remains a tool for creative people to develop their careers by bringing together people from around the globe to meet, learn and share ideas.

It’s sort of a spring break for the tech, marketing, film, and music communities and it attracts thousands of people who attend for the connections they might make, for the music they’ll hear, and for the learnings they’ll take away. It’s become a huge deal and passes to the event cost about $1,400 per person for mid-priced interactive badges that last the length of the 9-day festival. It’s an investment, obviously, and that doesn’t include all the spending by agencies and sponsors.

Here is the problem. They canceled the festival over concerns about the spread of the coronavirus and won’t refund attendees and vendors. They’re offering to defer your ticket to 2021, 2022, or 2023, but they won’t give you back the money. Is this in accordance with their stated policies? Yes, it is, but as we began the piece, these are odd times and maybe, just maybe, it’s time for this business to have another think about alienating their customers.

Many agencies have been cutting back their spending as the festival has become too big and unwieldy. I suspect this might anger those who haven’t been cutting back. Airlines have been refunding tickets and Airbnb recently announced that some coronavirus-related cancellations will qualify for refunds under its “extenuating circumstances” policy.  Many of the attendees are small business people looking to promote themselves or artists they represent. Tying up this money for at least a year can be a big hit, one that just might put them out of business by the next festival.

On top of all this, the festival company fired 30% of its employees. Insurance won’t cover enough to maintain the full-time staff where it was.

Should a cancellation something that should have been in the disaster plan? You would think so. This didn’t happen overnight. Companies and artists began pulling out of the festival weeks ago. Should the decisions that seem to have been taken about how to handle the aftermath of a cancellation been more consumer and business partner-friendly? Based on the extreme negative responses in both sectors, definitely so. Will SXSW ever recover from this? Time will tell, but the lessons we can learn will be the same. Be customer-centric. The short-term pain leads to long-term gain most of the time.

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Filed under Consulting, Helpful Hints, Huh?, What's Going On

Stocking Up

It’s Foodie Friday and the big news this week is the coronavirus. Besides the presidential election here in the US, nothing else seems to be getting nearly as much news coverage and rightly so. It’s a very serious thing, one that could require you to “self-quarantine” for 10 days to two weeks.

One of the more interesting effects that the spread of the virus has caused is people stocking up. It’s impossible to find hand sanitizer, either in a store or online and some enterprising folks are selling $5 bottles of the stuff for hundreds of dollars. Nothing like a little price-gouging, right? In Australia, it’s apparently hard to find toilet paper as Aussies have been stockpiling toilet paper in response to the coronavirus.

I did my regular weekly shop yesterday and the shelves were full of everything except the aforementioned hand sanitizer. It’s interesting. Every time there’s been a mention of a spell of really bad weather, bread, water, and eggs are hard to find as people stock up in case they can’t get out for several days. In this case, several days will extend for much longer and yet as I looked over other carts in the store, nothing seemed different. Maybe they’re not thinking yet about how to make three meals a day with limited access to the outside world.

It got me thinking. Most people don’t have a well-stocked pantry. I’m willing to bet most also don’t have a large, stand-alone freezer. I happen to have both, not because I’m a hoarder but because I like to have a lot of ingredients on hand to be able to deal with whatever meal situation arises. One study estimated that 80% of households don’t make dinner plans until 4pm that day. I try to plan ahead but the reality of work and energy sometimes sets in and those plans get changed. It’s good to have the ability to change up and having the pantry and freezer stocked up make that possible.

There’s a business point to be made here. I’ve worked in places where there was no “stocking up.” Budgets were locked and inflexible. There wasn’t any training system in place to help employees grow their skill sets. There was THE PLAN and that’s what was going to be executed regardless of changing conditions. As businesspeople, we need to think ahead. Not hoard nor overspend on solutions to problems that are highly unlikely to occur. But when there are warning signs, or as in this case, very clear examples, of a situation developing that could impact the business, we need to plan and move quickly. Think about how many businesses’ supply chains from China have been interrupted and you’ll get what I mean. For example, investing in training means that when some folks are absent and unable to work from home you’re covered.

How serious is the coronavirus problem? Watch the news for a few minutes and you’ll see that it’s quite serious. Stock your pantry with staples that will keep – pasta, canned goods, etc. Stock your freezer with frozen veggies and maybe some proteins. Hopefully, this passes quickly. Do the same for your business. Invest in stocking up and you’ll be prepared for any eventuality.

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Filed under food, Helpful Hints, Reality checks, What's Going On

Eating At The Bar

It’s Foodie Friday! As on most Friday nights, I’ll probably go out to dinner this evening, and since it’s Valentine’s Day, I’ll go early to make sure I get seated before the love birds on their twice a year dinner out clutter up one of my favorite restaurants.

I usually sit at the bar to eat at this place. Actually, I generally do that at most places since I find the service to be better. It’s also a lot more social and I’ve met some interesting characters who’ve become friends of a sort. At this place, I know the bartenders quite well and they make sure my glass is filled and the food is right. Truth be told, other than the burger, which is terrific, the food in this place is really nothing special. It’s all good but there are rarely specials and it’s sometimes a challenge to find something appealing on a very familiar menu. So why am I there so often? As it turns out, there’s a business point.

It comes down to the discussion between great customer experience vs. great product. I think CX, which you can interpret as service, wins much of the time. When I was in the corporate world, we worked with, among others, two very large tech companies. One provided superior products but their account people were dreadful. The other’s technology was good but not as good. Their account people, on the other hand, were the best. They anticipated our needs and addressed every issue we raised immediately. Do you want to guess which company was our favorite?

We found out that the first company paid their people bonuses based on sales while the second company paid based largely on customer satisfaction. This alignment of customer interests with company interests is exactly where any business needs to be. There is a famous Bain study that says 80% of companies think they provide superior customer experience, yet only 8% of those same companies’ customers think they get a great experience. Getting everyone’s interests aligned can help mitigate that.

I think we’re at the point where price and product mean way less than service and experience. Obviously, I wouldn’t let my love for the bartenders make up for inedible food or prices that were too expensive for the product delivered but the food is as good as any nearby competitor’s food, a meal costs about the same, and that’s good enough for me. Where do you come out on this?

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Filed under Consulting, food, Reality checks

It Don’t Mean A Thing If It Ain’t Got That Wing

Foodie Friday and one of America’s great food fests comes up on Sunday. Whether you’re watching The Super Bowl at home, at a party, or in a bar, there is probably an abundant amount of food around. One staple of football watching is the Buffalo Wing and they’re our topic today.

There is hardly a bar that doesn’t serve wings. That makes sense since they got their start in either a bar or restaurant (depending on which version of history you believe) in Buffalo, NY. The basic wing is deep-fried and tossed in a peppery sauce, but does anyone just eat basic wings? My buddy Barry owns a joint that sells 7 varieties of wings. Buffalo Wild Wings offers 25. Heck, even my favorite local tavern offers 10 varieties. But what those facts scream to me is that buffalo wings aren’t about wings at all: they’re about the sauce.

Think about it. Most places deep-fry the wings. When I make them at home, I dry-brine and bake them. I suppose you can broil them too. But does anyone really pay that much attention to the wing? Not really, unless it’s undercooked inside or has sat around so that the skin is chewy. Everyplace is after the same crisp product.

Where one wing shines over another is the sauce. The choice, and intensity, of the brand of hot sauce makes a difference. Dry rubs vs. sauce at all is a choice. We often get garlic and parmesan wings that feature nice chunks of garlic and grated cheese. Whatever your choice, there is a business point to be made.

What distinguishes most businesses is the sauce. Customers have expectations that the fundamental stuff such as basic customer service and a product that does what you claim it will are foundational – they’re the wing. It’s how you “sauce” the basics that makes all the difference. Just as with wings, the more ways you can do that the great the likelihood that you’ll allow the customer to find something that they love.

It really doesn’t mean a thing if you ain’t got that wing. The basics of business have to be sound before you worry about the sauce. That said, one thing I always ask consulting clients is what their special sauce is. It’s a question you should ask yourself about your business (and about yourself if you’re going to be job-hunting!). It’s the sauce that matters, after all.

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Filed under Consulting, food

Tasks And Experiences

Happy Foodie Friday! This article came into my news feed this morning. It’s about Walmart’s store of the future, where robots can fill grocery orders up to 10 times faster than humans. Pretty spiffy and it’s an interesting read, but it also got me thinking about a pretty important distinction about which I think you may want to ruminate.

When I go to the grocery store (every Thursday!), I have a list of things I want to buy. Most of the things on that list are there because I’ve planned out meals for the week and I need things to make those meals possible. It’s a pretty straightforward task. Other things are on the list because I use them in general and they’re on sale. Maybe I have a coupon that for them that is expiring. Maybe they’re on sale AND I have a coupon (can you feel the excitement?). Again, it’s pretty cut and dry – here’s the thing on the list, buy it and bring it home.

That’s really only half the trip, however. Inevitably, I find things to buy that aren’t on the list. I’ve found them as part of the shopping experience. Maybe it’s an unadvertised sale, maybe some local produce came in and looks spectacular. This is experience-oriented shopping versus the aforementioned task-oriented shopping.

Back to the article. It’s lovely that Walmart (and Amazon and others) are extremely efficient in servicing these orders, but they’re only serving the task-oriented shoppers. In-store discovery is impossible when there is no in-store experience. That’s why you always see “people who bought (the thing you’re buying) also bought (another thing).’ I think it’s also why Amazon is moving into physical stores, both through Whole Foods and their own “register-less” stores. Obviously, serving the task-oriented shopper is only half the battle.

I think it’s the same in other businesses.  Almost every business interacts with customers, partners, vendors, and employees in a task-oriented framework. When you stop and think about it, good businesses make sure there is an experience-oriented aspect to the relationship as well. What I mean is an experience that the participants can enjoy for its own sake and not as a means for accomplishing a task or achieving an extrinsic goal. Maybe it’s just drinks after work with no agenda. Maybe it’s a round of golf. All of my best business relationships had both task-oriented and experience-oriented aspects.

Think about how you interact with your customers. Is everything a task where items get ticked off a list or is there an experience that’s part of the relationship? How can you bring that balance?

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Filed under food, Thinking Aloud

Most Read Post Of 2019

Happy New Year and a new decade to boot! This post was the most-read screed I published in 2019. It’s fitting both to end and to begin the year with it since the topic involves change. This is the time of the year when many people stop and assess their lives which often leads to change. This piece, originally titled “Taking The Beaten Path” has to do with some issues involved in starting your own business. I published it last February and I hope you’ll give it a read and some thought if you’re thinking about starting fresh in 2020.

One of the questions that has come up often in my newish role as a franchise consultant has been why one should look to invest in a franchise to begin with rather than starting a business from scratch. After all, there are generally fairly substantial franchise fees associated with a franchise along with the other expenses one might expect when starting a business plus you usually have on-going royalties. You’ll still have to pay to incorporate, you still often need insurance, licenses, equipment, space, and people. Why incur the extra fees on top of the ordinary expenses? It’s a good question and I have what I think are some good answers. If you’re thinking of starting a business or maybe changing the nature of the business you’re running, here are my thoughts.

First, the biggest advantage of buying into a franchise is that it’s a business in a box. It’s a proven business model, one that comes with built-in support. Almost every franchise I work with has some form of training and on-going mentoring. I think about that in terms of the businesses that have hired me to consult in the past. Much of what I did would have been covered by that sort of support, negating the need for an outside consultant. The franchise will have research and the business results of all the other franchisees. That’s invaluable and beats the heck out of going it alone.

Another consequence of that is you’ll probably experience much faster growth. You won’t be spending time formulating a business plan. Instead, you’ll be getting trained and executing one that has been time-tested. Something as simple as logo design, which can take time and several iterations, is not really a concern. You’ll generally be presented with operations manuals and marketing materials. Your time to market is greatly decreased.

One thing that is much easier is financing your business. Franchises are less risky in lenders’ minds since they’re known brands and proven businesses. While banks aren’t the best source for franchise ending, there are many lenders who specialize in that (I work with 6 of them) and SBA loans are easier to come by as well. Finally, your potential customers will already know who you are. Most franchises have good brand recognition, and even those that don’t have a current local presence can often benefit from being seen as part of a bigger entity.

The Bureau of Labor Statistics says that roughly 1 in 5 of all businesses in the U.S. close after the first two years of operation and a little over a third shut their doors after four years. You can beat those odds by taking the beaten path and investing the franchise fee to gain the above benefits. In my mind, and why I added this to my consulting portfolio, that investment yields as good or better returns than blazing your own new trail. What do you think?

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Filed under Franchises, Helpful Hints, Thinking Aloud

Eating In The Cafe Car

This will probably be the last original Foodie Friday post of this year (and decade!). I’m writing it whilst barreling north on a train. I’m a fan of train travel. Putting aside the environmental pluses, I think it’s more relaxing and more social than driving or taking the plane.

The train has a cafe car that offers up snacks, drinks, and food. The “food” consists of microwaved stuff – burgers, sausage and egg biscuits, wraps, etc. I think you can probably find most of the items at your local Costco or supermarket. The drinks are generally unhealthy sodas (yes there’s just water) and the snacks consist of candy bars and chips. It’s not the sort of stuff that you would choose if you had a choice, but when you’re on a 9-hour train trip you really don’t have much of one, which explains the line out the door.

Most of the time you would not catch me eating anything that’s offered here. Oh sure, I love me some sausage and egg on an English muffin, but I’ll usually have a multigrain muffin with plenty of fiber, not some white bread masquerading as a muffin. I might put some interesting cheese on mine and not the “cheese product” I’m sure is on this thing. Oh yes, of course, I had one. I’m hungry and they were out of the healthier options

The cafe car got me thinking about what sometimes happens in business. When businesspeople find themselves in an unusual circumstance they often will let their standards slide. I suspect they feel much as I do now – they solved the immediate issue (hunger in my case) but there is guilt and the knowledge that the “solution” they found might have created more problems than it solved.

If I had planned ahead, I’d have packed a decent snack and brought my own beverages. Money isn’t the issue – everything in the cafe car is reasonably priced (except the liquor – $8 for a drink? And I thought the airlines were committing skyway robbery!). The issue is solving my problem without lowering my standards. That takes planning. Is your business doing that?

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Filed under food, Helpful Hints, Reality checks