Tag Archives: Strategic management

Don’t Surprise Me

You just can’t be too careful these days, can you? It seems that we hear every day about another data breach involving stolen credit card numbers or passwords or anything from your search history to your online shopping list. If you don’t pay much attention to your data security you are definitely, as my Dad used to say, cruisin’ for a bruisin’.

Since I try to make it a habit to practice what I preach, I’m quite careful about security. I use a password manager and I don’t generally store credit card numbers online, preferring to use that password manager to fill in the number as needed. It was quite disturbing, therefore, when my phone buzzed like a tornado was imminent yesterday. It was American Express notifying me of what they thought might be a fraudulent charge at the Microsoft online store. An email arrived simultaneously, telling me about the charge and asking me to click if I had knowledge of it. I didn’t and told them so, which immediately canceled my Amex card (and to their credit, Amex immediately generated a new number and I’ll have a new card today – why I’ve been a member since 1979).

Imagine my surprise this morning when I got an email from Microsoft telling me they “tried to charge your Xbox Live Gold subscription on Tuesday, August 20, 2019, but the charge of $60.59 to American Express was unsuccessful.” Well, no kidding. I told Amex not to pay it because I didn’t know that it was the renewal of something I very much did want to renew. Maybe if Microsoft gave me a little advance notice, which is what many other companies whose products I auto-renew to a credit card do, I wouldn’t have clicked the button that will now result in my having to change credit card numbers on several other things – my cell phone bill, two newspaper subscriptions and several magazines, and a streaming service among them. Every one of them notifies me before charging my card so that I’m expecting the charge. I guess Microsoft hasn’t figured out that when it comes to charges on a credit card people do NOT like to be surprised.

Had Microsoft put on their customer-focused thinking caps, they would have recognized that. Instead, I’m sure someone thought “let’s not give them the chance to cancel and go ahead and charge the auto-renew without telling them ahead of time.” That’s bad customer communication and bad strategy. By keeping the customer’s needs and perspective front and center, we won’t make mistakes like this. Agreed?

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Filed under Consulting, Huh?

Pumpkin Spice

This Foodie Friday, we’re taking a leap ahead into Fall, and if Fall means one thing to most people, it’s pumpkin spice. I know – you were thinking football, but no, my guess is that far more people are affected by the pumpkin spice thing than the pigskin thing. It’s a relatively recent development as spice companies didn’t actually make “pumpkin pie spice” until the 1950s and that became “pumpkin spice” in the 1960s. Some candle company began marketing a pumpkin spice candle in 1995, Starbucks picked up the flavor after many small coffee shops did, and the rest is food history.

Today, I saw what might be the last straw in the craze: Pumpkin Spice Spam. This is not a joke – it will be available only online and there are already cans of it out in the wild. Apparently, it doesn’t taste too bad – kind of like breakfast sausage. While I’m generally a believer in the “anything worth doing is worth overdoing” philosophy, I think we just might have hit our limits here, although one might wonder where that limit lies after pumpkin spice hummus, Four Loko, Pringles, gum, and vodka, to name only a few of the products that are out there.

There is a serious business point to be made here. Pumpkin spice is a flavor and a scent, and of course, you can add either of those things to a product to make it seasonally relevant, at least to some people. That doesn’t necessarily mean that you should which is the broader business point. There are often moments in business when we’re confronted with what some might call opportunities while others might see them as dilemmas. A bank might be able to make more money if it charges its own customers a fee to use their own ATMs or to have a debit card. That’s a bad idea.

There was a great piece published years ago called “Companies and the Customers Who Hate Them.” It talked about charging penalties and fees especially in the cell phone, cable, and banking industries. It concluded:

One of the most influential propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by binding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays. Companies have found that confused and ill-informed customers, who often end up making poor purchasing decisions, can be highly profitable indeed.

I don’t think that adding pumpkin spice to an already good product is on a level with some of the outrageous fees we’re charged as consumers but it illustrates the point that just because we can do something in business doesn’t mean that we should. Not only do you run the risk of having seasonal merchandise go unsold (unhappy retailers!) but also of having customers question your sanity. Neither is good business in my book. Yours?

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Filed under food, Huh?, Reality checks

Ball Position

I haven’t bored you with a golf-related screed in a while so let’s try that today. Yes, it relates to business too, of course. As I generally do over the weekend, I played golf. If you’ve been a reader for any amount of time you know that I find a great number of life lessons (and business lessons) on the links. Of course, given how badly I played the last few rounds, the only learning of which I became convinced was that I was really terrible at this game.

This morning, with my head a little more clear I went to the driving range. For those of you who are golfers, I thought that my problem was that I needed to shallow out (make a little flatter) my swing because I was digging very deep divots and not striking the ball particularly well. From time to time, especially when I was off the fairway (it happens), I was spraying the ball right because I couldn’t get the clubface back to square due, I thought, to the steepness of my swing.

None of that technical stuff matters, however. I had diagnosed the issue and thought I knew the answer so I went to the range to make a swing change. As with anything, big changes take time and I wanted to get going. You with me so far?

Well, as I was warming up to begin practice, an odd thing happened. I hit a ball with it positioned farther forward (think closer to my left foot) in my stance. The result was an absolutely pure shot – straight, high, and far. No real divot either, just a nice scrape along the ground. I tried it again – the same result. OMG – I don’t stink – the ball was just too far back (toward my right foot) in my stance and I had to come at it too steeply to hit it. With it forward everything else was fine. The club pro was on the range giving a lesson and he wandered over when he was done. He confirmed my swing looked pretty good. and that yes, something as simple as moving the ball forward 3 inches could change everything. Which is, of course, the business point.

How many times have things not been going well and someone – the boss, the management team, maybe you – rants that wholesale changes are needed? This usually starts a chain of events that paralyzes the enterprise. Here is the thing – it’s rare that a business loses its mojo overnight. It’s usually a gradual process of tiny changes, much like me having the ball slide further back in my stance little by little until I became used to playing it too far back which was making it difficult to play well. Businesses let things “slide back” too until they can’t operate well.

Much like my fix, it’s rare that major changes are needed in a business. It’s usually just a matter of paying attention to what had become different over time. It may require some outside eyes to help with that, but usually, the folks with good institutional memory can provide answers (yet another reason why you don’t get rid of all us older employees!).

Wholesale swing changes? Nah – just a tweak in ball position. Think about that the next time you’re contemplating a major change in your business. Yes, that might be needed but isn’t starting with some simple changes much easier and cost-effective?

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Filed under Helpful Hints, Thinking Aloud

A New Food Hall?

This Foodie Friday I’m doing something way out of the ordinary for this space: I’m going to quote heavily from a press release. Yes, that’s right – I finally got one that interests me because I think it makes a point that will be of interest to you. That said, I’m going to edit this to make a point in a second.

The Local Culinary, an all-new innovative (EDIT) restaurant concept led by seasoned European restaurant industry veteran and entrepreneurial visionary Alp Franko, today celebrated its official launch, with the opening of its first location in downtown Miami. With a (EDIT) kitchen located on South Miami Avenue, The Local Culinary operates eight individual concepts where chefs produce a range of creative, inspired menus.  Catering to both evergreen fare and timely dining trends, The Local Culinary is dedicated to serving modern, chef-driven food (EDIT) options inspired by global cuisine. From Mexican, Italian and Asian cuisines to burgers, fried chicken, healthy bowls, gourmet salads and more, the company’s (EDIT) restaurant fare is available to Miami residents (EDIT).

OK, so why would an announcement of what sounds very much like a food hall (8 restaurants under one roof) be particularly interesting? I mean you can’t go more than a few miles in many major cities without finding one, so what’s the big deal? I’ll give you a hint. According to a recent survey on Upserve.com, 60 percent of U.S. consumers order delivery or takeout once a week, and 31 percent say they use these third-party delivery services at least twice a week. Orders placed via smartphone and mobile apps are expected to become a $38 billion industry by 2020, with millennials as a driving force.

Did you guess? This is a virtual restaurant or restaurants. Everything I edited out mentioned that fact and that the food is only available via delivery. There is no physical dining room and all 8 operate out of a common kitchen. It’s a food hall without a hall and it caters specifically to the demand for meals delivered. Why I find this interesting, no matter which business you’re in, is that it is a reminder that consumer preferences change constantly and those changes can be devastating if you’re not anticipating them. Think about the landlords who own prime street locations for a restaurant. What happens when “restaurants” can be located in a warehouse with no real parking or storefront? What about the paper companies who haven’t geared up to fulfill orders for a huge takeout market? It doesn’t take a lot of thinking to figure out how many other sectors, from servers to bartenders to furniture to glassware this trend could impact.

Legacy thinking does nothing but gets you left behind. Look at the issues (since it’s Foodie Friday) that Kraft-Heinz is having. Big brands like Oscar Mayer and Maxwell House are out of step with modern consumers’ tastes and even though they were smart enough to buy an early plant-based “burger” company (Boca), they have been left behind by the newer companies such as Beyond Meat.

How far down the road are you looking? What are you doing about what you see?

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Filed under food, Helpful Hints, Reality checks

Symptoms, Diseases, And The Long Term

We’re into that time of the year when corporations are reporting their results for the last quarter. I tend to look at any single quarter’s results as a data point and since I’m a believer in watching things through the lens of the long-term, I mostly ignore anything strongly negative or positive unless it’s part of a long-term trend.

I’m sure it’s not a shock to any of you that the cable TV provider business is in a downward trend. I’ve written about this before and you might be one of the millions of folks who have cut their cable cord and gone pure streaming or supplement your streaming with an HD antenna to get your local TV over the air (everything old is new again!). Charter Communications is one of those cable TV providers who is watching their user base deteriorate. This last quarter, the company’s video customers sank by 150,000 subscribers, now totaling 15.8 million. At the same time, their Internet customers grew 221,000 to a total of 24.2 million, which also mirrors what’s going on elsewhere and the aforementioned trends. At the same time, these distributors are getting hit with increased costs for programming – what the cable networks charge the delivery guys to carry their programming (and in theory, the availability of which is why people pay for cable in the first place).

What the CEO said in making the results announcement, however, doesn’t mirror other CEO’s thinking and that’s what I want to highlight today:

Asked why the company doesn’t raise prices to cover increased programming costs, CEO Tom Rutledge said, “If you do a 10% programming price increase and lose 10% of your customers, you don’t really get anywhere and yet you’ve alienated a lot of people. In fact, that’s actually happening and has been happening. I expect continuous fighting for the foreseeable future.”

Mr. Rutledge gets it.  He is not confusing a symptom (customer loss amid increasing costs) with the disease (a rapidly changing business model reflecting consumer resentment at the high monthly out of pocket costs). Rasing prices would, in my opinion, accelerate the negative trend. It would stabilize earnings and make investors happy in the short term, but it’s not sustainable and would ultimately result in disaster.

More of us in business need to think that way. What’s a symptom and what’s the disease it reflects? What’s the right play for the long term even if it hurts in the short term? Does that make sense?

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Filed under Consulting, Reality checks

Becoming An Icon

What do you think of when you hear the word “icon”? You might think of those little squares on your smartphone screen that link you into an app. You might think of some other graphic that has meaning in the way that it looks. Or you might think about someone or something that is a symbol and is the object of uncritical devotion, as the dictionary defines it. It’s this last meaning that I want to address today.

Photo by Agnieszka Kowalczyk

You can probably think of several iconic brands – companies that are market leaders and offer great (read that as high-value even if they’re not high-cost) products to their customers. Disney, Apple, and others would qualify here. They have a lot of things in common despite their very different business sectors. They have strong branding that is unique in the consumers’ mind. The brand itself has a clearly defined meaning in those minds as well. Customers know what to expect and the reality of the product they receive usually beats those expectations.

Icons offer high value. Customers get their problems solved at what they perceive to be a fair investment of time and money. Icons are also very consistent – it’s a repeatable brand experience. Lastly, their positions are highly-defensible. It will be very hard for another brand to take its place. None of that is news to you, right?

The question I have is why don’t we think of our personal brands in the same way? Do we think about becoming an iconic business person, one that has a strong, unique branding in the business world? Are we consistent, offering all of those with whom we interact the same, high-quality experience? When people deal with us, whether they are partners, clients, suppliers, peers or employees, do they know what to expect? Are they excited about that prospect because they know a positive experience awaits?

In a world where we’re heading for a million corporations of one, your personal brand is becoming your corporate brand. Why not make it as iconic as you can?

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Filed under Helpful Hints, Thinking Aloud

Ghost Kitchens In The Sky

Our subject this Foodie Friday is kitchens, specifically kitchens that service your takeout order. Think about it for a second. You place an order for a meal to go at your favorite dining establishment. In some cases, you go there to pick it up. In many other cases, even years ago, you’d order a pizza or some Chinese food and it would arrive at your front door looking just as it did when you picked it up yourself. You probably didn’t think about if it was actually cooked in the restaurant’s kitchen since it looked and tasted the same as when you ordered at the place. In fact, it almost certainly was cooked by the same hands that were serving the dine-in customers at the same time.

Fast forward to today. With the advent of food delivery services, many more establishments are offering food for delivery. Most sit-down places have experienced a big jump in takeout, so much so that it’s become a significant percentage of their business. I think it also has to do with our general impatience these days. Who can sit still long enough to enjoy a meal cooked to order? So, many places are asking themselves why not set up a kitchen specifically to handle the delivery business rather than expand the restaurant kitchen to handle the additional orders. Ghost kitchens have arrived.

As one article described them, ghost kitchens are delivery-centric cooking spaces without the added hassle of in-person dining that a traditional restaurant brings. Think of them as cooking-focused WeWork spaces. Lower rent, no front of house, no cashiers and no customers tapping their feet waiting for their food are all part of the appeal. As long as the food tastes the same, why would the customer care?

I could write another 1,000 words about ghost kitchens and the pros and cons but the point I want to make today is that they exist because restaurants are rethinking their businesses. If they can grow at better margins and lower costs by doing that rethinking, can’t you? Some pretty big players – Google Ventures among them – are getting involved, and you know it’s just a matter of time before Amazon through Whole Foods starts delivering all those great dishes you can buy at your local store for a take-home or to work meal.

Is it inconceivable to you to share accounting, legal, and other back-office functions with another business that’s non-competitive? A ghost kitchen for your business? How about having your sales staff pick up some lines that complement yours and offer both to customers that might be interested?

If you’re not thinking out of the box, the box might just become a coffin. Instead of a ghost kitchen, it might be a ghost business!

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Filed under food, Helpful Hints, Thinking Aloud