The price of waiting

It’s typically not difficult to calculate the cost of starting something, of moving ahead, of taking the plunge.

Perhaps it’s a new IT project or a marketing test. Possibly it’s a decision to try a pilot concept or invest in a promising technology. Or maybe we’re considering taking the next big step in a hopeful personal relationship.

When we have to ante up additional time, write that big check, invest more emotional commitment, the price tag often seems pretty obvious.

Yet what we get wrong (or dramatically underestimate) are the consequences of our hesitation. We lean on the desire for better data and convince ourselves we need more time to weigh or explore our options. We become a slave to the pull of our perfectionism. We tell ourselves the time is just not quite right to act.

Ultimately, what keeps us stuck, what causes us to not pull the trigger, is our fear of getting it wrong, of looking stupid, of being judged, of fully experiencing and feeling our vulnerability.

It’s not hard to see how waiting too long to innovate has been the death knell for many companies. Think Blockbuster, Netflix, RadioShack and (soon) Sears. They paid (or are paying) the ultimate price for waiting.

My guess is that with whatever organizations you’ve been involved in you can readily point to opportunities that were missed because moving ahead was deemed too risky, when just the opposite proved to be true.

And maybe we’ve let real love and connection allude us for similar reasons.

Indeed, sometimes the waiting IS the hardest part.

Alas, other times it’s all too easy.

And we realize how high the price is when it’s all too late.

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The drip method of irrelevance

At first, the shift is almost imperceptible.

With quarterly earnings expectations to hit, we tell ourselves we can easily save a few bucks by automating some of our customer service functions. Or perhaps it’s through simplifying our organizational structure or eliminating “non-essential” positions. Better yet, let’s close some “unproductive” stores.

And obviously technology enables us to take away a bit of decision-making from the front-line staff. After all, human beings are notoriously misled by their own intuition. And whoever got fired for praying to the God of Efficiency?

And running all those different marketing campaigns adds a lot of complexity. It would be much easier to boil things down to just the major stuff that we know moves the dial.

And our product line is just too diverse. Sure it’s interesting to have something fresh and innovative, but doesn’t that just increase the risk of slowing down inventory turnover and increasing markdowns? Safe is smart right?

Of course, over time, the top-line stops growing and the only way we know how to drive profits is through cost-cutting.

Over time, we’re proud of our low average talk times, yet customers can’t speak to a human being and our Net Promoter Scores continue their inexorable decline.

Over time, our one-size-fits-all marketing is, at best, indistinguishable from the competition and, at worst, a dim signal amidst all the noise.

Over time, the sad reality is that all we sell is average products for average people and there’s no reason to pick us over the guy with the lowest price.

Sears, RadioShack and a host of others that are on a long inevitable march to the retail graveyard didn’t get trumped by a disruptive competitor that emerged out of nowhere. An oppressive government didn’t regulate them out of business. They weren’t crippled by a series of specious lawsuits or hobbled by natural disasters.

Usually the brands that become irrelevant have made hundreds of seemingly small decisions, over many years, that prioritized the short-term ahead of the long-term, the numbers instead of the customer, mass rather than personal, safe not remarkable.

And once they are gone, once their fate is sealed and their previously storied histories are part of the record, we’ll look back and realize it happened gradually, then suddenly.

The problem with saying “no”

During the past 25 years Sears had at least three opportunities to transform itself by entering the home improvement warehouse business (I worked on two of them). This was probably the only way Sears was going to ultimately survive and unlock the value of its franchise Kenmore and Craftsman brands. Each time the answer was “no.”

When I headed up strategy at the Neiman Marcus Group (2004-08), we evaluated building a leadership position in omni-channel by consolidating our disparate inventory systems, we recommended moving from a channel centric marketing organization to a customer and brand focused one, we proposed aggressively expanding our off-price format and, having understood the share lost to competitors like Nordstrom, we analyzed improvements to our merchandising and service models to become a bit more accessible. Ultimately we said “no” to moving ahead on all of these. Years later, these strategies were ultimately resurrected. But the opportunity to establish and extend a leadership position may have been lost.

Obviously there are plenty of times when either the smart or moral thing to do is to say ‘no.” Obviously it’s easy to look back and say “I told you so.”

Yet systemically, most organizations are set up to reward the status quo (often cost containment and driving incremental improvement) and punish the well intended experiment. So it’s easy to say “yes” to the historically tried and true and “no” to just about everything else.

Of course we don’t have to look very hard to come up with brands that have been struggling for many, many years (Sears, JC Penney, Radio Shack) or have completely imploded (Borders, Blockbuster, etc.). All of these said “no’ to any number of potentially game-changing strategies along the way. Care to hazard a guess at how many long-term Board Members of these perennial laggards and outright losers got pushed out for saying grace over a series of crippling “no’s”? How many CEO’s had their compensation whacked for never missing an opportunity to miss an opportunity?

In a world where change is coming at us faster and faster, we need to be challenged just as much on what we are saying ‘no” to as we are on what gets a “yes.”

And If you think there is always time to fix the wrong “no” decision, you might want to think again.

Everywhere. And nowhere.

You’ve probably read the admonishments. You must be everywhere your customer is: online, bricks & mortar, mobile, Facebook, Twitter, Pinterest and on and on.

You’re told the future is now and that future is all about allowing the consumer to shop anytime, anywhere, anyway.

You’re urged to create a seamless experience across all channels and touch-points.

And much of this is valid. If you don’t meet your customer where she is (and is headed), you’re very likely to be yesterday’s news (RIP Radio Shack). More and more, the consumer IS everywhere and channel hop is becoming the norm.

But for those who think that all they need is a little omni-channel pixie dust and a side order of frictionless commerce, think again.

In the rush to embrace all things digital, integrated and omni-channel, far too many brands have lost sight of the need to be relevant and remarkable. Most of the capabilities that industry white papers wax eloquent about–and consultants relentlessly peddle–are merely the new table-stakes. And, quite frankly, your mileage will vary. Perhaps a lot.

Sears has made huge investments to create powerful digital and integrated commerce capabilities. In fact, they are regularly recognized for their leadership position in many aspects of what industry pundits describe as the holy grail of everywhere commerce. So how’s that working out? Oh yeah, they forgot to sell stuff people want in the way people want it. This is certain to end badly.

On the other hand, Amazon has managed to become a retail industry behemoth, crushing competitors in its wake and continuing to gobble up market share, all without physical stores and, in many cases, putting forth a pretty lackluster mobile and social presence. Their lack of “omni” doesn’t seem to be slowing them down too much.

As I’ve pointed out before, the future of omni-channel will not be even distributed. For those brands that rush eagerly into the “everywhere retail” world without a clear view of the customers they wish to serve and how they wish to serve them in a relevant and remarkable way, don’t be surprised when you don’t get the ROI you hoped for.

It’s quite possible to be everywhere and nowhere at the same time.

Overplaying our hand

We’re told to hyper-focus on our core customers. After all, doesn’t most of our profit come from a small group of loyalists and “heavy-users”?

We’re admonished to double-down on our highest ROI marketing strategies. Surely if a moderate amount of email or direct mail or re-targeting is working, more must be even better, right?

And exhortations to find our strengths, exploit our core competencies and “stick to our knitting” are central to many best sellers and legendary Harvard Business Review articles

Lather, rinse and repeat.

And this all makes a lot of sense. Until it doesn’t.

The past few years have brought us dozens, if not hundreds, of brands that have gone away–think Blockbuster, Borders and, very shortly, Radio Shack–largely through adhering to these notions.  Still others sit on the brink of irrelevance–I’m looking at you Sears and Blackberry–because they pushed a singular way of thinking well past its expiration date and, sadly, the point of no return.

Even far stronger and far better managed brands fall into the trap of overplaying their hands. Neiman Marcus (my former employer)–along with many other luxury brands–have had to re-work their strategies because they became overly reliant on a narrow set of highly profitable customers and failed to acquire and retain other important and emerging cohorts.

It’s all too easy to become distracted by peripheral issues or to stray into areas where we have few useful capabilities. We always must be mindful of where the customer gives us–or where we can readily earn–permission to go.

But in a world that is changing ever faster, and where new competitors can often launch highly disruptive business models in short order, what got us to where we are isn’t likely to get us to where we need to be.