When an organization isn’t achieving its revenue potential, the worst case scenario may be that it is meeting its goals and is nicely profitable. That’s because much of the management team charged with growth is “comfortable”. They are dealing with what they see and know and are more obsessed with validating their business/marketing plan than they are questioning its validity in today’s marketplace. If there is no challenge from ownership to improve, nothing will change.
In retail, the great question store owners can ask themselves is “why doesn’t everyone in (Calgary, Edmonton, Vancouver, Saskatoon, Toronto, etc) shop here”? From that very simplistic starting point develops a discussion on market segments, geography, market awareness, value proposition, advertising, price points and so on. Often times at the point where the business owner realizes he/she might have to expand the product line, improve service, open another location, or hire more salespeople in order to get more of “everyone” to the store, not knowing where to start, either nothing happens, or a non-issue is addressed because it’s the safe move.
The path to its true potential for any organization lies in understanding the potential of its customers to desire and require products or services it is capable of delivering in conjunction with the inability of its competitors to be able to recognize and meet those needs with the same value. Note I said “capable of delivering”; this is what makes Apple a great company. Yes it develops outstanding products based on leading technology with exceptional marketing and supporting online and in-store sales platforms, but it also recognizes, as do the market analysts, that if it is not continuing to reinvent itself, its market share will suffer. This speaks to more than just the birth of the tablet market, fathered by the iPad. It is all the other creations from 1-1 training at $99 a year, to a $109 MobileMe subscription service (which, amongst other things will locate that lost phone for you) to an iTunes and App Store. They want every dollar their customers spend on technology, and there’ll be no end to the pursuit of that goal because it is impossible to define.
Starbucks was another company that had it right, but they got comfortable and before they knew it had billions of dollars shaved off their market value. They thought the “issue” to growth was expansion. They knew how to open stores and franchises, so they opened one on every corner. Then, when the economic crunch hit, having a $5 latte more conveniently located didn’t cut it. Only the founding chairman, Howard Schultz, saw what was happening from the outside and decided to jump back in. He made three impressive moves: created more demand by closing over 900 stores; started a capital improvements project to restore local neighbourhood ambiance; and rolled out instant coffee packets successfully. He also did something else very interesting recently – he removed the words “Starbuck’s Coffee” from the iconic mermaid logo. Branding heresy you might say? Or is it Schultz’s way of saying he’s getting ready to satisfy even more of its customers’ desires?
Right now, if you run or own a business you might be saying, “sure that’s impressive, but I’m not Apple or Starbucks, nor do I have a sliver of their resources”. Don’t let that be your take away. I’m simply challenging you to “think” like a Stephen Jobs or a Howard Schulz. That costs nothing.
Managing Partner & Principal