Your Customer Experience, and That Yellowed-Linoleum Look

Have you had the experience of walking into a new store or restaurant on opening day? All bright and shiny, entirely overstaffed with smiling faces tripping over each other to help you. Or the grand opening of a grocery store, with the aisles all clean, the lighting bright, all the lanes open. Then you come back in a year or two or five – the linoleum is stained and yellowed, the ceiling tiles streaked with smoke and grease, doors are broken, light bulbs burnt out, signs are crooked, there are only two lanes open, staffed by clerks who are too busy to acknowledge you, and the portions are smaller.

What happened?

It’s not just that the cost accountants moved in - something fundamental and special has been lost, and no one seems to have taken notice.

SWOT

The SWOT analysis is one of the more useful of management tools when aggressively pursued. But too often it turns into an inauthentic exercise done merely for its own sake, completed by teams that go through the motions instead of taking its strategic implications seriously. We have all likely participated in dozens if not hundreds of SWOTs, some for our own departments and others in review of various enterprise-wide business functions and product lines, and we’ve seen a variety of approaches and attitudes over the years. Let’s break it down into some of the strengths, weaknesses, opportunities and threats of the SWOT exercise.

Innovating For the Numerator

The National Academy of Engineering identified fourteen “Grand Challenges for Engineering” that must be addressed in order to achieve a sustainable, economically robust, and politically stable future. (see the full list here) The challenges are a call-to-action for solutions to some of the most pressing issues in the 21st century: identifying safe and clean energy resources; providing for human health, nutrition and security; restoring and reinventing infrastructure for urban habitation; advancing computing power and capabilities; and developing new tools for teaching, learning, medicine and scientific discovery.

FP&R, or, How We Kicked The Spreadsheet Habit

Are you missing the “A” in your FP&A (financial planning and analysis)? Maybe missing some of the “P” as well? Are you and your department getting a bit tired of the “FR” gig you seem to have landed?

Trendspotting. Coolhunting.

While you might not think that businesses outside the trendy, youth-focused fashion and music markets would have much to learn from the practice of “coolhunting”, there are some key product life cycle principles common to both. Coolhunting is market research aimed at discovering, in their infancy, new trends in youth markets, catching them in the process of becoming ‘cool’, and then capitalizing on that knowledge by being first on the scene to take advantage of it. Coolhunting typically involves on-the-street interviews or focus groups, and there are numerous firms that specialize in providing this service, as well as other retailers and manufacturers that have taken this capability in house. The seamier side of coolhunting involves planting / infiltrating your people and products directly into the market, or paying certain key influencers in order to have them use and tout your product as if it was their own idea.

After-Market Service: from “First-call” to “No-call” Fix

Once I was chairing a conference where the speaker was explaining the business model for the licensing of the Peanuts cartoon characters - Charlie Brown, Snoopy and the gang - and how all that works when it comes to the balloons for the Macy’s Thanksgiving Day Parade (in case you are wondering, they cost about half a million $ each). The speaker was running well over his allotted time with the end nowhere in sight when he turned to me and asked, “How am I doing on time?” Looking out at how he had the audience spellbound in rapt attention, I simply said, “You’re doing fine – keep going”. There was no way I was going to prematurely interrupt this master class in media business models.

Of Products and Customers, Cabbages and Kings

Product evaluation criteria can utilize these four categories:

1) Fails to make money under any and all measures
2) Does not cover variable costs, but breaks even when future / downstream / derivative / service / after-market revenues are included
3) Covers its variable costs (which already includes standard direct and indirect costs, since he is assigning all costs via ABC)
4) Covers its variable costs and its associated cost of capital

Once you’ve segmented your products (or customers) by profitabiltiy, one of the basic tenants of activity-based management is to take the necessary actions to move the losers into the break-even column, and shift the break-even products into profitable territory. Yet his history showed that, once introduced, products tend to improve their profitability up to a point, then peak and level off there, no matter what actions R&D, manufacturing or marketing may attempt to propel them to the next level.

Prescription? We need to be better disciplined about terminating the losers.

Metrics: Too Many Different Ways of Keeping Score

You’ve likely played an organized sport at some time in your life - How many different ways were there to keep score? How many different ways were there to determine the winner? Just one – right? It was goals, or runs, or points, or something, but never goals and/or assists, or some weird combination of runs, hits, errors, average, ERA, RBI’s and on-base percentage.

Now, ask the same question about your business – how many ways do you have of keeping score, of determining if you’ve “won” (i.e. met your key strategic objective)?