Focusing On Your Strategy
By Marc Weiss - CEO, Management One
“Without strategy, execution is aimless.
Without execution, strategy is useless.”
-Morris Chang, CEO of TSMC
Socrates said. “We are what we think about.” Earl Nightingale updated that thought to, “We become what we think about.” Buddha goes on to say “All that we are is the result of what we have thought. What we think we become.”
After reading all the blistering painful news about retail recently, I felt compelled to write about what we think about. And it counters what we are witnessing as our clients will finish May more than 10% over 2021 and plus 30% against comparable figures for 2019. If we think about the news and its disproportionate spin on negativity, it can disrupt our businesses. If we think about strategy then we replace the “stinkin thinkin” that Zig Ziglar talked about with a more mindful and productive use of our thought processes.
The answer for me was to always be thinking about strategy. Knowing where you want to get to is in the most elemental form, strategy. Focusing on that and the execution to get there is a remedy for the bumps in the road that occur as conditions out of our control change. Focusing on your strategy keeps you from making knee-jerk decisions based on the latest news cycle. It also keeps everyone in your organization pulling in the same direction toward the same goals. Moving in the same direction fosters productivity, and productivity creates profit.
Scenario 1
If you think your business is going to be affected by inflation and your perception is that your customers will buy less, then that becomes your reality. You may cut staff, cut purchases, lower margins, and reduce other expenses. You will take the necessary actions to make that a self fulfilling prophecy. The danger is that you make these changes without checking the data to see if what you think reflects what is happening in your business. This is sometimes called negotiating against yourself. You have decided the outcome before checking to see if there is truth. In negotiations this always puts you at a great disadvantage.
Scenario 2
If you think that your customers will spend more because of inflation (an 8% increase right now is maintaining at inflation), and you have not adjusted margins, you’ve maintained expenses to be in line with gross profit, and continued to make purchases based on trends in categories, your outcome will be different and the upside is you are open to acquiring market share.
Both scenarios reflect what you think about. Retailers are in business to take risks. The best way to mitigate risk is to ensure all decisions are data-driven and to stay focused on where you are going.
So a strategy may be that you are going to make all decisions based on data, measure your decisions, and then fail fast. That strategy will eventually become part of your operating process, and that frees you up to build new and other productive strategies.
There are merchandise strategies that should be complementary to your business strategy. For example, some of our luxury clients opted to be pure luxury and moved away from some of their lower opening price points. This raised the average transaction, made the salespeople happy as their performance pay increased, and helped them get vendors that were previously not available. The shift is also reflected in their marketing, their relationships with other companies, and how they flow in goods and the types of events they create. They are always thinking about how to build on that strategy as they measure what works and what does not work.
Another strategy may mean you are going to focus on marketing. You are comfortable with your strategic and merchandise direction and want to increase your market share. It may start with, I want YY more customers annually, that spend $xx per year. Or it might be that I want to increase the frequency of visits of my customers that currently shop with me. That would require having a good CRM, faster inventory rotation, and measuring specific benchmarks on customer purchasing. As you work through the tactics to get there you measure what works well and what does not. Your actions and what you think about are directed towards reaching where you want to be.
The benefit of having a strategy is you are focused on building and not reacting. It allows you to better respond as outside forces may or may not impact your business. It keeps you from making short-term decisions that can sometimes be hard to overcome.
Turbulent times are here to stay. We can overcome many challenges, defeat negativism, and build our own prosperity if we focus on what is in front of us to seize.
Onwards and Upwards.
Marc