Failure - Avoid or Embrace?

Failure is something that most people try to avoid. This is perfectly natural as no one likes to admit failure – particularly if that failure results in the collapse of a business and the impact that has on the owners, team members, suppliers and customers!

However, the fear of failure also has the effect of hindering the growth of a business. Failure in the context of this is not necessarily the failure of a business, but maybe the failure of a strategy in that it did not reap the reward relative to the investment made, financial and/or time.

However, it’s important to recognise that reward is inherently connected to risk. That is to say, if you take no risk at all, you will most likely have a business that will at best be average or most likely below average.

That may satisfy some – however, for most business owners, their aim is to grow their business and the financial rewards that come from it. To do this, they must distinguish themselves from what their competitors are doing. In other words, lift themselves out of the sea of sameness and look to provide something different or unique that their customers will see value for and be willing to pay for that privilege!

This means that businesses need to experiment with both new products and services and how they can be delivered. Technology is also a significant interrupter in how customers wish to deal with a business.

Experimentation comes with an element of risk – but without risk, you are guaranteed that whilst current profits may be maintained, future profits will most definitely be eroded.

I came across a simple method of assessing the implications of risk – which is simply answering two questions in respect of the identifiable risks associated with the possible change?

1. What is the likelihood of a negative result?
2. What would be financial implications of the negative result?

So, if the likelihood of failure is high but there is a negligible financial impact on this, it still might be worth a try as something great might be developed, but the downside is low.

However, if the likelihood of a negative result is low, but the negative financial consequences high, it still may be worth testing, but having strategies in place to minimise the both the possibility of the situation occurring but also minimising the financial impact should the idea fail.

Any failures that may occur under these criteria could be termed “smart failures”. These are failures arising from actions that have been carefully planned and assessed and outcomes monitored.

This leads me to the next important step in this process – learning from ones mistakes! It’s one thing to say this and another to actually learn and grow because of a failure. This is where the US Army’s After Action Review (AAR) system is a really useful tool to apply in business. The purpose of this process is to find the cause of failure, not the culprit. At the core of the AAR are these five questions:

1. What was supposed to happen? ie what was the aim of the strategy?
2. What actually happened?
3. Why was there a difference in the expected and actual outcome?
4. What can be learnt from this failure?
5. What will we do about it?

Going through this process in respect of all strategies, both successful and otherwise, will result in the business learning and  therefore  growing – and will foster a culture that embraces change. This will be a critical element of any business in any industry as industry is disrupted through technology advances and other influences.

And one final point – maybe it’s best to refrain from calling a strategy a “failure” if it doesn’t work as planned as the word “failure” comes with negative connotations and fear. Maybe we’re best to say the outcome was not what was expected!

How to Avoid Becoming a Commodity!

These days more than ever the competitive advantage pursued by many is to discount and commoditize an industry. Prime examples of this include warehouse pharmacy stores, electrical retailing and hardware. As a result, the relentless pursuit of being the cheapest product and service provider has meant that the smaller, service focused business is eventually forced out of business.

In many circumstances, the failure of these businesses has been due to the smaller business forgetting what made it successful in the first place – rather, trying to compete on price only, which was bound to be unsuccessful. Why? Because only businesses that will succeed by discounting will be those that have the lowest costs of operation, including buying power and whose discounting generates enough volume to compensate for the margin given away.

Now, with the continued growth in on line sales, the challenge of meeting this additional competition becomes even greater.

Businesses need to reinvent themselves in this brave new world.

But there is still hope. Studies like the J.T. Kearney survey “What Do 81% Of Shoppers Do in Stores That Only 19% Of Shoppers Do Online” indicated that a large percentage of customers (61%) still prefer to shop IN STORES for many reasons. That means that stores can survive and thrive by making some adjustments in their physical and psychological offerings. The key is for retailers to understand and focus on how and why their customers shop, and then retool and redeploy the store network accordingly.

Categories where customers especially favor the personal experience of in-store shopping include beauty and personal care products; footwear, apparel and accessories; consumer electronics, pharmacy and grocery products, home and furniture, home improvement, and office supplies.

In an article written by Gilon Miller of Upstream Commerce some suggestions are provided to transform themselves into more interesting and attractive places:

1)    Make the store a place of DISCOVERY. A place where consumers can learn more about products, try them out (think Apple) and hunt for (or happen upon) hidden treasures. This, by the way, is part of the thrill of the hunt for product and pricing consumers say they want.

 

2)    Make the store a place of ENTERTAINMENT. Provide an exciting in-store environment that engages shoppers, especially those who enjoy shopping and consider it a social experience. This can be literal entertainment -- music, shows, happenings, etc. A more entertainment-focused venue builds longer-term engagement with the retail brand and the lifestyle it represents, says the Kearney Study.

 

3)    Make the store a place of great RELATIONSHIP. That is, make the store the ideal place for personalized service—before, during, and after the sale. (Customer quote: "Stores that treat me like a person and not a number get my business.")

 

4)    Make the TRANSACTION the key. A convenient, enjoyable transaction through
short checkout lines and service-oriented cashiers helps build brand loyalty. The point of sale also affords an opportunity to boost profits by upselling or offering value-added services.

In summary, it is as important as ever to make your store the place where people WANT to shop. What are you doing now to innovate and transform your business – to ensure that it will survive and thrive in the brave new world of community pharmacy? A new world where price is not the only determining factor!

Some possible actions:

·         Brainstorm each of the four points above with your team

·         Ask your customers (a Client Advisory Board may be a great start) – what are you doing now that customers value and therefore you need to keep doing? What could you be doing to make their experience better?

·         Look at other industries

·         Do something!

We have facilitated many Customer Advisory Boards, It’s something that customers can really value and provide engagement with the business. If you would like to know more about this process, feel free to contact us.

And finally, we wish you all a Merry Christmas and happy and prosperous new year!

Tough Times Means Time to Innovate!

I think we'd all agree that things seem pretty tough out there in the business world today.

In fact, many would think we have been hit with the perfect storm - recessionary like conditions, political uncertainty, growth in internet ecommerce, increased consumer saving, just to name a few.

However, as a business owner, you have choices available to you that will influence the outcomes that your business will provide you. These are simply:

1.    Do nothing and hope that the good times will return

2.    Try something different

Now there is an old saying that it is a sign of insanity in thinking that if you keep doing the same thing you'll get a different result! So, if you continue to do the same as before which was not working, you are most likely to get the same (or worse) result.

It is possible that we are in the process of an evolution in how we conduct business. The things we did in the past may no longer be effective or relevant to achieve success in the future. We live in a brave new world where we will need to continue to listen to customers and markets - in general look outside our business for strategies that will differentiate our business from the past and our competitors.

Of course, some of these strategies may fail so there is an element of risk involved! However, profit comes from risk and identifying winning strategies involves testing - in other words, not betting the house on one option.

So, what are you doing to be innovative?

Speaking about resistance to change - we strongly recommend the book "Who Moved My Cheese". This is a short, easy to read book about how change can sneak up on you and leave you exposed. For those who don't like reading, click below to view a short video:

The future is entirely in the hands of the person who looks in the mirror at you each morning!

Oh, and one more thing. You may also need to contemplate that when things are extremely difficult, then an appropriate action may be to get out. Industries and markets change - sometimes for good. And what was once a viable, thriving industry may no longer be. Examples would be typewriters, buggy whips, film cameras and processing, newspapers and video hire stores, just to name a few. The key is to know when to get out!

What are you doing differently than, say 5 years ago?

Guarantee Your Business Success (or Substantially Increase Your Odds!)

Recently a business partner of mine outlined a couple of instances of poor customer service that he or members of his family experienced whilst shopping locally at Christmas time.

The disappointing thing about one of those experiences was that the perceived poor customer service was provided by the new owners of a business that had just been purchased.

Now you would think that a business owner in these circumstances would be falling over themselves to provide a great customer experience - the fact that such poor service was provided, well, just astounds me!

This is not unusual, however - if you asked any business owner what was unique about their business, you can almost bet your bottom dollar that their answer would be "our customer service".

Well, I'm sorry to say that based on my experiences, these are just motherhood statements that have absolutely no relevance to what is happening "on the floor". And it applies to all industries, whether its retail, service or otherwise.

So what are the signs of poor customer service? I'm sure I really don't need to spell them out - but given that the majority of business owners don't really understand what great customer service is, let alone members of their team, here are some examples that immediately spring to mind:

1. Lack of product knowledge
2. Lack of acknowledgement of customers
3. Failure to return phone calls or emails
4. Failure to truly understand a customers needs
5. Lack of courtesy, manners and respect - what happened to the word "thank you"?
6. Over promising and under delivering

Unfortunately, the cold hard facts are that in the majority of cases, customer service is dead.

The good news, however, is that for the minority of businesses that understand and provide a great customer experience, their businesses are flourishing, even in these most difficult times. For the remainder, they'll continue to blame the drought, the recession, the internet - anything or anyone other than themselves. And until they take a good look in the mirror and accept responsibility for the situation, their business will continue to underperform or possibly fail.

So... what can you do?

What you need to do is create a system built around your agreed customer service standards. The beauty of having established customer service standards is that they can become part of the fabric of your business - a critical part of your recruitment and training systems. 

Don't have any customer service standards?

Then create some! Look at all points of contact that you have with a customer - let's call them "moments of truth" Map out the process and for each point of contact set in place clear actions to create the experience you wish to provide. You can involve your team members as well as customers in this process.

Document your customer experience steps to create a customer service system and service standards.

It is not rocket science and does take time. However, the rewards are substantial and on going.

I'll finish with one final point - it doesn't matter how good your customer service is, if the quality of what you produce is sub standard, you will not succeed, not matter how good your customer experience is! (Although you may stay in business a little longer)

Do you have documented customer service standards supported by a clearly planned customer experience system?

If not, what is stopping you?

I'm interested in any comments you may have.