The Great Leadership Fraud

 

The ability of the human mind to delude itself astounds me.

The degree to which we ignore reality, or worse, bend it to our preferences is a debilitating feature of a wholly unnatural state.

Nowhere is it more evident than when it comes to leadership.

Everywhere, and I mean absolutely everywhere you look in the reality of the environment that surrounds us — including other human beings — we notice HIERARCHY: Man — Predator — Reptile — Plant — Dust.

And within each element there is a hierarchy. Within the animal kingdom, we have the food chain as an age-old, accepted fact. Something or someone goes at the top and you work your way down the chain. Some gemstones are worth more than others. Some things are stronger, more beautiful and more precious.

We invented sport to celebrate the ranking of hierarchy. Five stars. Gold, Silver, Bronze. Miss Universe. IQ. Chairman. Dux. (My company is named after the ‘winner’ in a bull fight.)

Yet. Yet.

We promote a faux egalitarianism. We live in a democracy, where every vote counts equally. Everyone is claimed to be ‘special’. Everyone is able. Even if everyone doesn’t win, everyone CAN win.

And most importantly, everyone can learn to be a better leader.

Seems to me that this does not conform with reality.

Leadership is an evolved trait — in response to environments. That means there is a natural scale to leadership ability. The natural status of things is challenged by leadership trainers who exploit our desire to grow with seductive but ultimately false promises.

They claim they have an ability to change your ability.

But is this possible?

Can you train a possum to be a wolf?

I am thinking this may be one of the biggest cons of our times.

When I look at the actual advice that aspiring leaders is given, it seems to me that the changes consultants and trainers promote, mostly relate to superficial, environmental and inconsequential changes you must make that creates the illusion of leadership. How you need to organise your diary. Or set an agenda. Or position your body. Or dress or diet like so.

Sometimes the advice appeals to an illusory ideal: be tough, be kind or be something — anything but acceptance of what you are now, because then I would not have an ongoing consulting gig.

Leaders emerge from their environment. For the tribe in survival mode it is the alpha figure. Under other circumstances, other leaders may emerge. That usually happens as a result of some faux rationality superimposed on the environment that happens — like being elected for having perceived skills or having made promises that appealed to the group’s self-interest.

The false belief that a leader can be made is a necessary preconception required to justify the entire leadership improvement complex. It is a myth we gladly buy, because who does not want to be more leader-like?

The reality is that the hierarchy is steep, there is only one top dog in every tribe, and aspire as much as you like, you have to kill the leader in order to take the top spot.

So we go about killing them, usually through subversion, rarely though a fair fight. The environment that leaders operate in has achieved a veneer of civilisation, designed to protect the weak and unequal.

Eventually, the weak wins: a pack of hyenas shred the once-strong lion, now disabled by convention and civility.

Maybe that is why companies fail at such an alarming rate: we refuse to acknowledge the natural order and survival that depends on having actual, strong leaders who are born to lead, and instead we have the insipid pretenders who win those positions because they made a set of rules to suit them.

(Maybe Nietzsche was right?)

When you look at the political leaders we have had (post-Howard) in Australia, I think the evidence is clearly in. People who get to the top are not necessarily suited to the top.

Sometimes I don’t even like the conclusion I come to in my own arguments, but it seems to be unavoidable outcome when you can’t change the facts of the matter. And in a time in the evolution of business and society when we need strong leaders, we need to take an honest look at who is leading the pack.

It is not so much a debate about whether leaders are born or made, it is about revealing the fraud that underpins the promise that a leader could be made.

Because humans have an innate desire to grow and improve (to better survive) we have accepted the myth of the made leader at the expense of the harmony and happiness that comes from knowing your place in the natural order.

Everybody is not a leader. Everyone can’t become a leader. The evidence is everywhere you care to look. If you were honest. If you have to question if you are a leader, and if you think you need more training to become a leader; you aren’t one. At least not a good one.

 

Img: http://www.jacoglaw.com

The Antithesis of Amazon will save Australia

In Retail, it used to be about who you knew. Over the last hundred years Retail was about a guy who knows a guy who knows a guy who knows a guy.

I want to sell something, I need to know a guy who imports stuff who knows a guy who exports stuff who knows a guy who makes stuff who knows a guy who sources stuff.

Before that, when retail happened in marketplaces, it was merely being the guy, or at worst, knowing a guy who farms stuff.

Amazon’s success can be attributed to becoming the original (farmers’ market) - they need to only know the guy who makes stuff - or at worst know the guy (affiliate) who knows a guy.

With one critical difference.

In the digital landscape, they did not need to be restricted to a physical geography for many products (like books). And then they used that advantage to enter the markets for products where geography is a factor (like food.)

I am describing the idea of the supply chain: it used to be very short. Then, in an effort to introduce variety and alternatives and to reduce some friction and inefficiencies with economies of scale, the supply chain lengthened.

It lengthened to the point where it introduced sufficient variety but also serious inefficiency.  That made it attractive for people to forsake many of those benefits for the sake of a reduction in price and cost.

Think again about how Amazon got started:

What do people who buy books want? They want to:

-       Browse/sample to see if they would like it

-       Talk to a sales associate who could recommend/inform

-       Start reading (as soon as possible)

Bookstores did all of that - at a price of say $30 per book.

Amazon offered them the following:

-       You can get recommendations, not from one individual but from many people

-       You can browse exponentially more, at any time, for as long as you want

-       You can’t start reading for a few days while you wait for delivery (pre- Kindle)

BUT you pay only $15!

People liked the trade-off. Then Amazon went directly to authors. Then they introduce digital delivery (immediate). And they did not even have to reduce the price further because even though their costs declined, there is no competition to force them to charge market rates.

Retailers of course know how important the supply chain is. The major supermarkets have been accused of abusing their market power to wring efficiencies from it. That was the lazy way. The hard way would be to re-imagine what the supply chain looks like altogether, not merely accepting what is and squeezing it harder.

So, Amazon has taught the lesson we never seem to learn: change happens dialectically. That is, you have the status quo (thesis) and then someone comes along and does the opposite (antithesis). Then over time, these two positions are synthesised into a new thesis. (Amazon buying bricks and mortar, more and more warehouses is happening.)

Amazon’s strategy (and a few others) seems to be driven by megalomaniacal founders. Ego is the secret juice, not strategy. How big must the ego be if you can convince investors to accept that “In its two decades as a public company, Amazon has had a cumulative profit of $US5.7 billion? For a company with a market value of nearly $US500 billion, this is negligible. I don’t think they have ever paid dividends as far as I can tell.

Eventually, they will increase their cost base and the supply chain will lengthen and frictions will appear. Landlords. Brokers. Transportation agencies. Suppliers once and twice removed. It is going to happen. So, Amazon also has to learn to know a guy who knows a guy...

Then someone will come along and do the opposite. Just when Spotify’s market value spikes, vinyl record sales just hit a 25-year high.

That is why I love entrepreneurs. They are so antithetical.

There is a lesson in that somewhere.

Or at least a bumper sticker.


Dennis Price: Co-Founder at WWW.YEARONE.SOLUTIONS can be reached at dennis[at]ganador.com.au

Image from: www.tutorialspoint.com

 

Have you got your copy of THE BEAT OF THE MALL yet?

What started out as a collection of blog posts is growing into a small book. The 'preview' - which IS the collection of posts, is available for free download.

The final version is going to trace the history of societal change from the Neolithic Era to today - and ultiumatley identify the real fundamental drivers of the modern marketplace - which gives us insight into how it wil evolve.

If you want a copy when the time comes, just drop your name in the box and we will let you know when it is available. That version will be more than a few blog posts.

How to persuade the world you are right

 

Dear trolls,

I shall be writing about gender, but I am not entering into a debate about gender with you or anyone about that now. I am going to write about the mechanics of swinging public debate.

I want to explore about persuading people en masse - at a societal level. How do you ‘win’ a public debate? The topics du jour are for instance abortion, climate change, homophobia and gender equality - and given the audience’s likely interest, I am focussing on the latter.

The lense that I am viewing this through is that of behavioural economics and neuroscience. I will focus on how and why the current approach fails - which is not a comment on whether the approach is true or false.

That is, I am going to criticise you for over-cooking the steak, and that does not mean I don’t like steak or that I am a vegan. My dietary preferences are irrelevant to the topic at hand.

Capiche?


How do you win an argument with half the society? How do you pitch your proposition so that your target audience buys your version of events?

The argument for and against Abortion is an example where an argument was had at a socio-cultural level. Few people will argue that abortion is today commonly accepted as a woman’s right. (Whilst I am personally anti-abortion, ‘my side’ lost the debate.)

In the 60s the era of free love heralded an era of sexual promiscuity (or sexual liberation, depending on your frame) and unwanted pregnancies increased dramatically, raising the need for abortion as the only viable post-coital solution to the problem.

For decades the debate raged within a frame of Pro-Abortion and Anti-Abortion. Progressive, secular leftists were typically pro-abortion and conservative, religious traditionalists were typically anti-abortion.

The abortion issue was resolved when the framing of the debate shifted.

WHAT IS A FRAME?

Imagine if you were given the following choices:

A. Be given $240 - guaranteed

B. Be given 25% chance to gain $1000, and 75% chance to gain nothing

Statistically and rationally, which is the best option? Which would you choose?

In the research of Tversky & Kahneman it played out as follows:

A: 84 percent

B: 16 percent

That is, even though Option A is statistically/logically the worst option, people still choose it. Why?

Because most people choose to avoid loss rather than chase the potential of gaining even more. When it comes to making many of life’s choices their default frame is that of ‘loss aversion’.

The debate about ‘diversity’  - specifically gender equality - is a case where those in favour are trying to persuade those against to pick ‘option B’. Diversity proponents think they have logic on their side and want to win the argument on that basis.

The argument for and against Abortion is an example where an argument was had at a socio-cultural level. Few people will argue that abortion is today commonly accepted as a woman’s right. (Whilst I am personally anti-abortion, ‘my side’ lost the debate.)

In the 60s the era of free love heralded an era of sexual promiscuity (or sexual liberation, depending on your frame) and unwanted pregnancies increased dramatically, raising the need for abortion as the only viable post-coital solution to the problem.

For decades the debate raged within a frame of Pro-Abortion and Anti-Abortion. Progressive, secular leftists were typically pro-abortion and conservative, religious traditionalists were typically anti-abortion.

The abortion issue was resolved when the framing of the debate shifted.

Instead of discussing the issue as a wanting to kill vs not wanting to kill an unborn baby, the debate was framed instead as one of being Pro-Choice vs (by implication) Anti-Choice.

Most people don’t think too deeply about these types of things. When such a proposition is considered, it simply sounds stupid and feels it stupid to claim you’re NOT Pro Choice.

Who in their right mind would want their ‘right to choose’ denied, right?

Not long after that the idea of abortion not being an issue of the life and death of a baby became an issue of civil liberties; the frame was ‘the freedom to choose’ as opposed to  a frame of ‘killing the unborn’.

That was how the debate was won. That is the neuroscientific insight that can be used to tackle the Gender Diversity issue.

What is the status quo?

Organisations are struggling to articulate where they stand on the issues of gender diversity, equality, human rights and sexual identity, all the while not even being sure that they should even be claiming a position on these matters.

The Guardian called 2015 the year in which companies will take a stand on social issues.

●     Some companies are leading the charge: Qantas, led by a gay CEO (in Alan Joyce) being the exemplar for affirming publicly their position on these social issues.

●     Some companies remain silent, trying to quietly get on with business.

●     Some companies are bullied into adopting a stance that ostensibly supports the popular social justice narrative. (Hello Coopers beer.)

●     Some companies are taking a stand that supports an alternative view. From the lonely baker not wanting to bake for a gay wedding to Saudi national soccer team who did not support the minute of silence in memory of the London attacks, not everyone subscribes to the popular narrative.

The battle lines are drawn and the strategies that are typically employed :

●     Appointing Diversity and Inclusion Managers

●     Launching Women-in-XYZ Industry programmes

●     Setting gender-based targets

●     Making loud public statements

●     Feminist tweet storms

●     Publishing ‘think pieces’ on popular blogs

●     Virtue-signalling Gamma males

●     Boycott and bullying tactics

These are the ‘Option A strategies’ attempting to sell the positive ‘gains’ of diversity.

None of the above initiatives will work the way they are intended, however laudable the intentions and however noble the ambitions. In fact, I argue that they actually have the opposite effect of harming the cause.

THE CURRENT PROPOSITION

Proponents of Gender Equality frames it variously as issues of:

●     Fairness

●     Diversity

●     Better Performance

●     Gain

The proposition is failing to get traction because it is framed incorrectly.

THE FIRST AXIOM: IT MUST BE TRUE

OR: Why the current strategy won’t work - counterintuitive truths and unintended consequences

Whatever you are choosing to persuade the people on must be TRUE.

You can NOT say abortion is about choice, if choice does not play a role. Having a different frame/lens does not change the ACTUALITY OF REALITY. It simply changes how you look at things.

None of the arguments proposed by proponents (of gender equality) are logical and neither are they valid. The truth is, people wear the default lense that is more concerned with loss, and what they are hearing in your argument is:

●     It is not fair. Only the men are going to sacrifice something.

●     It is not about diversity; it is about ideological conformity.

●     It is not about performance: the facts say otherwise.

●     It is not about gain, it is about loss of male privilege.

A fact is a fact, even if it is unpopular

When you want to frame the debate in a way that that does not recognise the ‘losses’ then it is likely to fail. The current debate has multiple factual and logical flaws that make it easy for sceptics to dismiss the validity of the proposition all together. Space limitations prohibit the full exploration of the supporting evidence, but the following are facts and/or reasonable conclusions. Please bear in mind that your own ‘lens’ may want you to see things differently, so just settle down and read on:

  1. There is such a thing as male privilege.

  2. The rarefied atmosphere of Blue Chip Boards is a closed shop - not only females, but even for highly competent males.

  3. The debate is dishonest. It is ostensibly about equality, but in truth it is about something else. It is rarely about underrepresentation of women in the roof tiling or profession or amongst the grave diggers. And the debate is never about getting equal representation in the prison population - which is overwhelmingly male.

  4. If the actual debate is about economic power and the concomitant freedoms, it is a legitimate debate to have.

  5. There is little benefit in giving up the male power base, so let’s not pretend diversity is about equality that has benefits for all.

  6. Men know they have to give up something, and loss aversion is a thing – and asking them to embrace it anyway is not realistic nor smart.

  7. Men are generally hardwired to be somewhat pragmatic and are typically less emotional about things. (And that is a fact.) Appeals to emotion won’t work in this case.

  8. Claims of equality are irrational. The differences between genders are obvious and the only way you can accept ‘equality of gender’ is to actually deny reality. Most men are simply not romantic enough to accept that version of reality. Mr Friedrich Nietzsche said it as follows: “Equality is a lie concocted by inferior people who arrange themselves in herds to overpower those who are naturally superior to them. The morality of 'equal rights' is a herd morality, and because it opposes the cultivation of superior individuals, it leads to the corruption of the human species.”

  9. Many men don’t really believe in these initiatives, but are acquiescing to public pressure or making these moves for personal career advancement. Sadly, some may not even recognise it in themselves. Virtue-signalling is now a thing. (The reason they don’t believe are because of the multiple erroneous/ dubious claims being made in the process of attempting to win them over.)

  10. Whilst women are underrepresented in certain roles, it is highly unlikely that it is so on the basis of overt gender-discrimination. A sceptic might ask where all these CEOs endorsing ‘diversity’ today were a mere three or five years ago. I think the truth is simple: none of them spoke up five years ago because no one thought five years ago that women were being discriminated against, because they weren’t! I have never (in three decades, across multiple organisations and on multiple continents) even heard a rumour where men conspiring to discriminate against someone because she was a woman. This is a sample of one, but it is a fact.

  11. If the people don’t think they have a problem, you will have a hard job fixing it. Have you ever met an executive male who will admit that HE is the problem? Or one that would give up his board seat for a woman?

  12. The fact of the matter is that there is wage disparity between genders, but most likely for several reasons that has nothing to do with male privilege. Here is an article that lists a bunch of facts which should at least indicate to an objective reader that such a sweeping statement about income disparity is not a simple, universally accepted one.

  13. The research also does NOT suggest that ‘diversity’ in Boards or Senior Management perform better. Read this piece by Wharton management professor Katherine Klein that summarizes academic research on the topic and comes to the simple conclusion: “Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse.”There is also research that shows that, in the US, unmarried women in full-time work in big metropolitan centres actually out-earn men.

  14. The proponents of diversity have not taken the time to study their opponents, taking a self-righteous approach without recognising that the utopian view is fraught with logical fallacies.

  15. Your gender does not make you a good or a bad boss. The worst boss I ever had was a woman. The best I have ever had was a woman. It is a sample of one, but it is still a fact. (And this is why the argument that you need more female bosses fails - any gender can make a good/bad boss.)

  16. Making a Board reflect an ideological commitment to diversity for the sake of diversity will fail because you are simply replacing one failed ideology (chauvinism) with another alienating ideology (feminism). It is a fact that feminism alienates most males (which is why women still do most of the house work.)

  17. If you choose gender as the basis of selection, you set up the selected people for failure. Tim Newman wrote on his blog about the Executive Team of the responsible entity for the building that went up in flames in London and gleefully pointed out how ‘diverse’ the Board is.

  18. Diversity peddlers ignore the very essence of Marketing: Punters ask themselves ‘what’s in it for me’ before they buy. In this particular debate, the honest answer is a bit of self-righteousness and not much else.

  19. Diversity activists are tackling the wrong problem: The problem with boards is not that they are filled with Old White Dudes. The problem is that they are filled with people - who happen to be OWDs - who all think and act alike. Cialdini popularised many of these factors, and in particular, the neuroscience behind ‘Liking’, ‘Social Proof’ and ‘Consistency’ are well established. And these are the factors that drive the decisions we make, including who gets the job.

  20. Evidence of under-representation of one gender does not equate to subversive discrimination against that gender. Correlation is not causation, right? There is likely to be a systemic problem, but it is not necessarily male vindictiveness.

I am convinced (so this does not qualify as a fact) that women of competence don’t want to be given roles because they are women. Was Christine Holgate appointed as CEO of Australia Post because she was a woman or because she was the best candidate? What about Julia Gillard or Gail Kelly?

Whether you agree with all of the above is irrelevant. Whether you like it is irrelevant. I am suggesting that the public (whom you are trying to persuade) believe that the above IS the reality, your frame will not succeed if runs counter to the reality.

SECOND AXIOM: PICK THE RIGHT FRAME

By reframing the debate, we re-think and we re-affirm what we mean by, teamwork, leadership, effective communication and decision-making. By focussing on these ‘frames’, people realise there is is nothing to lose, and consequently that there is nothing to fear.

By redefining what success looks like, we are establishing the new attributes we are looking for in a leader. The lazy alternative is that companies are simply saying that we need more female leaders, which will bring those ‘new attributes’ to the table.

Both approaches achieve the same outcome, except that the latter is resisted because of the implied losses for the incumbents.

What we should be doing is to stop defining the only successful leaders as being aggressive, ball-breakers, connected to some ‘network, etc.; which are typically masculine traits and few women will ever measure up.

A good communicator is not the person with the loudest voice who can make others listen.

An effective team is not one who drinks and plays golf together.

If equality is framed as ‘success looks different’, and if equality is framed as ‘everyone can be successful in a different way’, and if equality is framed as ‘it takes all kinds of people’ to make the world go around; how could anyone argue with that reality? Importantly, there is nothing to lose, male OR female.

Any man who currently feels excluded from the boys’ club, and most importantly all of society would intuitively embrace the idea of ‘different strokes for different folks’ as coherent with their view of the world.

Just like everyone feels they should have the right to choose, everyone feels that it should be good to allow for differences since they believe we are different. (The logic notwithstanding.)

In the practical world we need diversity and you need unity. When you are considering a workforce or a board, you need to accommodate both these elements.

You want unity and similarity in that everyone who is elected to the board must have a certain type of experience and must have certain level of intellectual horsepower. You may want unity in their commitment to a cause or a passion for a particular market.

You want diversity in temperament, diversity in styles. You want action-orientated people and you may want strategic long-term thinkers. You may want conservatives and you may want progressives. Sometimes you need the ball-breaker and sometimes you need the diplomat.

If you only aim for diversity, then you will create discord. If you only aim for unity, you foster groupthink. Neither one is a recipe for success.

If Women accept that ‘equality’ is to be achieved by reframing what success looks like, they have to be willing to forego the illogical insistence that there is never a valid reason why there may need to be gender-specific roles.

It has been done it before. Not so long ago, the idea of  ‘commitment’ was re-framed in organisations. People can now leave at 5:30pm or drop the kids off before work and not be branded as lacking commitment or being lazy. Commitment and your work ethic is judged on your output (a new frame) and not your hours spent at your desk (the old frame).

Focussing on gender to remedy gender diversity is fixating on the symptom, not the problem.

The women I know who are great candidates for promotion, would prefer to be picked because of their abilities and not because of their vaginas. No matter how many times you squeeze the tomato, it won’t ripen any sooner. On the contrary, you are simply ruining something great, no matter how noble your intentions.

If your ladder is leaning against the wrong wall, it doesn’t really matter how fast you are climbing it.

The ‘right’ frame is the one that minimises ‘regret’

This is the way (the new frame)works in the real world:

  • You are respected for your position, your capabilities and talent - not merely your gender.

  • If you screw up, you are judged on your failures, not your gender.

  • If you succeed, you are admired for your success, not your dress sense.

  • We admire certain traits and attributes for what they are.

  • We recognise that women and men are different, but of equal value.

  • We are willing to be surprised by people’s abilities which may not conform to preconceived expectations.

  • We believe our differences are what makes us better together.

  • You need different notes to make good music.

  • We can all learn that neither of us make decisions with our genitals, despite the popular conceptions that we do.

  • If we both accept that equality is about opportunity, fairness and mutual respect, we may be able to accept that some jobs are naturally and practically more suited to another.

THIRD AXIOM: CONGRUENCE OF BELIEF AND BEHAVIOUR

We ‘spot’ when someone is telling a lie, without even knowing how we did it. We don’t have to process things rationally to pick up a problem. Our brain simply registers the signs (behaviours like touching your lips) and the the actual words you are speaking.

That is the easiest way for our (lizard-) brains to make decisions - to be attuned to incongruence. The ‘frame’ you talk about needs to correspond what you do about it. Your WALK must match your TALK or people will notice, even when they don’t know they do.

The ‘special initiatives’ (noble as the intentions might be) reinforces the stereotypical roles of the benevolent male (we will give you certain privileges) and the weak female needing special assistance.

Affirmative action is an ACTION that is INCONGRUENT with the BELIEF and the statement that ‘women are equal’.

Danie Craven was a revered rugby coach in South Africa. He forbade his players to celebrate when they scored a try. His rationale was that scoring tries is what is expected of his team, and they should NOT act as if it is a rarity. I don’t know if that contributed to his success as a coach, but the idea is psychologically powerful: don’t celebrate your success as if you are surprised by it!

In early 2016 there was a story about a female pilot (Tracey Curtis-Taylor) who flew from Britain to Australia in a 1942 biplane. The news anchor (I forget the channel) gushed about the achievement of this brave woman who flew the plane single-handedly all this way.

Acting surprised when a woman achieves something (that wouldn’t make the evening news if you are a man) is not a smart way of spruiking the strength and bravery of females. Just do the story and let the fact that it is a woman who was brave (or whatever) speak for itself.

I have lived through Affirmative Action programs as beneficiary and as victim. Even the benefits have unintended consequences and the key disadvantage is that these programs are like a virus that infects and eventually paralyses the host. All round, it is a bad idea.

People may believe fervently in an idealised reality where things feel good and everything is just fair. Unfortunately, that is not reality. And the only way to fix this is to deal with the reality we face.

Re-distributing wealth and re-assigning Board seats are all strategies that inflict pain on one side of the ledger. People are naturally averse to this. By re-imagining and re-framing the debate to be about the gains both sexes will make, you rewrite the narrative and stand a chance of persuading them. Of course, those who don’t subscribe to the idea of parity will continue to frame the debate to be about what men (all incumbents) will lose.

CONCLUSION

To persuade the world, the successful approach requires that (1) it must be true, then that you (2) pick the right frame (that minimises regret) and finally, (3) ensure beliefs and behaviours match up so that you don’t undermine the message.

I have illustrated this approach with the gender equality debate. The same ideas work for any scenario where you want to persuade someone.

A better frame for Climate Change will be about benefits of innovation, job creation and the like; i.e. the things you will gain. The current frame is accentuating the losses. We won’t be able drive everywhere, we need to give up air conditioning. We are going to LOSE jobs. Proponents are trying to claim (with religious ferocity I might add) that we should do the right thing and ‘save the environment’. All we hear and all we think about is what it is going to cost us. In fifty years when the sh*t hits the fan, I will be dead, so that particular calamity is not particularly real. Having to give up my car, here and now, is a real pain and few people think it is worth the price.

The only aspects of the climate change debate that succeeds occasionally is when they excessively appeal to science, but articulate it in a way that makes people fear looking stupid by denying it. But that applies to only some people. Real climate change deniers actually know a little bit about climate change - at least enough to know the science is not as settled as climate apostles would want you believe.

Which brings us to the most important question: which is the best way to cook a steak?

There is a Michael Collins is all of us

I am pretty sure most literate people know the first man on the moon was Neil Armstrong.

And the majority will know that Buzz Aldrin was the second.

Few know that the third Astronaut iin that team was Michael Collins.

He was a ‘mere crewman’, and did not even get to set foot on the moon after flying all the way there with fellow astronauts Armstrong and Aldrin. (Charles P. Conrad was the third human to walk on the moon.)

People often comment about how no one remembers who came second. In fact, researchers have documented that people who win the silver medal are despondent for losing first, whereas those win bronze are happy to have medalled.

This tells us that we judge our success or failures on relative terms - compared to to other people. And that is a bad habit to fall into.

Collins did all the same training, had to meet all the same requirements and probably was paid the same. He too got to the moon. The fact that no one remembers Collins or Conrad, does not change anything. The achievement is no less for someone else having achieved more.

In business it is the same.

Jeff Bezos will soon run the first Trillion Dollar company in the world and you may run a local shoe store in a country town. Or maybe you are the Area Manager for the small retail chain. You may not have built the Harbour Bridge, but merely build shopfronts.

That does not mean you don’t have the same smarts. The same abilities. The same talents. The same persistence. The same potential.

But most importantly we all have the same worth.

We should judge ourselves or others by how well known they are.

[Image from: www.jumpintoabook.com/]

How do you ACTUALLY 10X your retail experience?

Everyone knows eCommerce is shaping what customers expect to be available in product, expediency, price and service. A physical space with real people interactions cannot compete with a virtual/digital space on many of these elements, so it is critical to find/create and then focus (relentlessly) on the differentiators.

 Everyone knows the answer to sustainable differentiation lies in delivering great retail experiences.

 Everyone talks about (the importance) experiences and even the experience economy.

 But no one seems to know how exactly to do that.

 Tell the staff to smile more? Crank up the music? Then what? Few people seem to agree or even understand what the ‘experience’ is, never mind how to go about creating it. That is why we need to find an answer that is practicable.

 (The phrase 10x - pronounced ten ex - is buzzword originating from the tech startups obsessing about rapidly scaling their growth. Young people in a hurry are not interested in incremental improvement.)

WHAT IS THE NATURE OF EXPERIENCE?

It appears that the idea of retail experience is much like the definition of pornography: I can’t define it but I know it when I see it.

 It may seem obscure to start the search for a practicable solution with a dictionary definition but you can’t create something (an experience) if you don’t know what it is you are trying to create.

That may be true, but it is unhelpful. So I looked it up.

I found that ‘experience’ comes from the late Middle English, via Old French from Latin experientia, from experiri ‘try’. (Compare with experiment and expert.)

 This does not seem to be useful in creating a practical framework for creating experiences, so I choose to define the retail (consumer) experience as -- the positive emotional consequences of value consumption.

Experience must be Positive:

Experiences may be positive and negative.

But it is obvious that negative experiences are not what we aim for when we talk retail. Positive implies that we know what positive is and what that means for the consumer, but let’s take it as a given that we know what customers need.

Experience is primarily Emotional:

Experiences may be functional and emotional.

Any experience also has a rational element, but the functional dimension of the interaction/ transaction addresses those rational needs.

Example: When you buy a loaf of bread the functional needs are addressed by receiving and consuming a loaf of bread that satisfies the hunger.

The smells, the friendly staff etc create the emotional dimension of the experience of that we seek to create.

In the context of retail experience, the functional element is addressed by virtue of the retail store enabling the transaction - people receive the food, the clothing and so forth, and that component of the interaction exists adequately. It may be improved by reducing friction, but that in itself is won’t make people flock to a store.

We really want to focus on creating and improving the emotional dimension of the experience.

Experience must have intrinsic Value:

The value of a product or a service is that which the consumer/patron is prepared to pay for/ invest in or sacrifice for.

The dollar value of the investment is merely one manifestation of value, but value could also be the time invested to acquire, the risk tolerated (for getting it wrong) and the opportunity cost.

The value of the t-shirt is not $30; it lies in the fact that it clothes me, allows me to be socially accepted, be thought of in a certain way, helps me hide the man boobs and does not require me to mortgage the house.

(Note: Value has many dimensions - there are six categories of consumption value, to be exact. The emotional dimension is a critical one and the hardest to get right.)

HOW TO CREATE EXPERIENCES

If retail experiences are about creating positive emotional consequences that have value, the next obvious question is what the drivers of those experiences might be.

Experiences are created by inanimate drivers that are found in the environment in which the value is created. The sights and sounds and textures and colours all contribute to an experience.

Experiences are created via animate drivers; the human interactions that occur in that environment and that effect and affect the transaction: People interacting with people.

It turns out that this human interaction is really the most important aspect of an experience of value. No surprise there.

There are two steps to creating the experience:

Step 1: Removing Experiential Inhibitors

There are always elements in the environment that will conspire to disrupt the positive emotional value you are trying to create.

Things like bags that break, parking spaces that are unavailable, staff who are absent and so forth are the elements that conspire to inhibit the experience.

But merely being able to find a park or having a shopping bag that doesn’t break won’t contribute to the overall (positive) experience of value, but their absence/presence will inhibit the delivery of a positive retail experience.

To create an environment that is free from experiential inhibitors requires that we identify them, evaluate them, minimise, change or remove depending on the need.

Reducing friction at POS is an example of reducing experiential inhibitors. Retailers are currently trialling technology that allows perfectly frictionless POS - where consumers will simply pick an item and leave the store.

Step 2: Creating Experiential Outcomes

The next step is the art of creating the emotional interaction between human connections.

This is how you can 10x the retail experience.

The key to success has very little to do with customer.

The key to success lies with your staff. The logic is simple: staff create the experience, so make sure they enjoy that experience.

If we ensure the creation and delivery of consumer experiences is a positive, rewarding experience for STAFF, they will in turn deliver that experience which the consumer values.

Staff will create great experiences to the exact same extent as they get a kick out of doing it.

The starting point is NOT mapping a customer experience journey.

The starting point is employee engagement. The challenge we must address is how to make the delivery of the desired experiences a positive experience for our staff.

So, how do we 10X the retail experience?

I said earlier that the dictionary definition did not appear to be very helpful, but it turns out it is. To recap: experience comes from Latin experientia, from experiri ‘try’ - compare with experiment and expert.

It seems to suggest that creating great experiences is about becoming expert at experimentation.

It is not hard because we don’t know what to do. Itis hard to do for different reasons:

One: People start at the wrong place. (Think about the customer instead of the employee.)

Two: There is no recipe, no blueprint and especially no silver bullet.

Three: To make the experience of delivering positive experiences a positive experience for the staff, and allowing and encouraging them to experiment (and fail and learn) takes courageous leadership. It requires some long-term commitment to a complex change management process with unquantifiable short-term benefits.

Start in the right place. Have courage to experiment and fail. Have the discipline to continue. Be committed in the absence of short-term gain. That is why it is hard. That is why it calls for leadership.

And that is why it will remain an important differentiator.

And that is why it is worth pursuing.

Dr. Dennis Price

Co-Founder: www.yearone.solutions and www.ganador.com.au .

Bazza & Bull is the Top Brand. Again.

Photo by Gabriel Santiago on Unsplash

One of the endearing things about Australia is the style and wit of nicknames. Some aren’t particularly imaginative (Bazza) and some are - calling the smallest bloke on the team ‘Bull’ for example.

And this perfectly illustrates the misunderstanding of the whole notion of brand.

The range of perspectives on branding is astonishing. At the one end of the scale there is that group who believe it is all wank and does not really matter, and at the other end there is the group who create the wank with jargon and buzzwords.

The long version is that your brand is all of:

  • Brand Equity
  • Brand Values
  • Brand Principles
  • Brand Essence
  • Brand Identity
  • Brand Positioning
  • Brand Image

And as many more as you can come up with.

That is what many people think a brand is.

The reality is different.

Your brand is ACTUALLY whatever the customer thinks of it.

You may think you are Barry Special, but if everyone else thinks you are Bazza, you’re Bazza. But I am guessing most brands are more Bull than Bazza.

The 7 Immutable Truths of Prosperous Shopping Centres

Bal Harbour Shops is the most lucrative, most productive, and most profitable shopping area in the world. Located in Miami, Florida, the mall is renowned for being the hotspot for individuals who belong in the high-end market with money to burn on extremely expensive products. (Image from http://www.therichest.com/

Bal Harbour Shops is the most lucrative, most productive, and most profitable shopping area in the world. Located in Miami, Florida, the mall is renowned for being the hotspot for individuals who belong in the high-end market with money to burn on extremely expensive products. (Image from http://www.therichest.com/

Not all malls will survive, not all malls will die. The question is what to do to ensure your mall is winner?

In the coming evolution of malls, there are a few (IMHO) self-evident truths to be considered.

Truth 1: The Offer

The offer (retail mix) will change, possibly unrecognisably so. At one point the malls have become the go-to place for any shopping, primarily offering convenience. The mainstay of the mall became the easy shopping for functional comparison goods like fashion.

In the last decade or so the trend has been towards more experiential forms of retailing, but to be honest ‘experiential’ meant adding food - ala ‘eat street’. This was a relatively one-dimensional view of ‘experience’.

Recently the emphasis has widened to include services (healthcare, libraries, gyms).

The two obstacles that prevent malls from evolving sooner and better are:

Lack of retailer-led innovation.

Mall owners can only facilitate the infrastructure needed to retail; they are not retailers or even in the retail business. Too many retailers are acting like deer caught in the headlights of e-Commerce (or the B-Double called Amazon.) And, very importantly, ‘retail experience’ has become a buzzword and few people seem to be able to articulate.

The other obstacle is the lack of flexibility.

Some of that is caused by local government planning regulations. And some of that is self-inflicted, as investors demand rigid lease structures (to minimise risk and differentiate from other investment classes) but these structures do not facilitate agile retail and innovation.

Truth 2: Time Horizon and Lag

The malls that will survive have owners who play the long game. The current system has considerable inefficiencies caused by the (a) different investment and performance profiles of landlords vs tenants, and (b) the resultant friction costs caused by the lag in relative fortunes.

The solution is to adopt an ‘agile’ lease structure. I will address this in another post.

Truth 3: Balance of Power

The balance of power between landlord and tenant will oscillate during the transition, even if it now favours the retailer in most instances.

Truth 4: eCommerce

The nature of eCommerce will influence the format of the new mall.

It is shaping what customers expect to be available, both in product, expediency, price and service. Responding to this challenge requires two tactical responses:

Attack by differentiating:

A physical space with real people interactions cannot compete with a virtual/digital space on many of these elements, so it is critical to find/create and then focus (relentlessly) on the differentiators.

Defend by Seamless Integration:

This is what the commentariat mean by ‘multi-channel’ retail. Ensure the customer can seamlessly move between channels, irrespective of  the specific stage of the purchase journey.

This will eventually determine the retail mix of the mall in very specific ways. (Keep reading Inside Retail and I’ll share those thoughts in future article.)

Truth 5: Technology

Technology will play a key part in the functionality and features of the new mall.There was a short segment on the Today Show (The Future of Shopping). The crux of the message was frictionless payment (true) and walk-in-walk-out shopping (not so true).

True:

In Psychology, there are two types of stress: one is called eustress and then the old fashioned distress. Point-of-sale causes distress. That is why tap-and-go payment resulted in higher frequency of purchase. Trütsch  found (2014) that “contactless credit and debit card adopters undertake statistically significantly more transactions by their corresponding payment cards compared to non-adopters while this also holds true for overall card services payments.”

Not so True:

Walk in, walk out shopping (WIWO) with no interaction at all will be adopted to some extent by certain consumers for certain types of experience. WIWO shopping behaviour is adopted where less friction is desired, but less friction is not required in all elements of shopping.

If there is no friction there is no interaction, if there is no interaction, there can’t be a (pleasurable) experience. (Ahem.)

Truth 6: Fundamentals

The malls that survive will do so because they address the core values that underpin all consumption. An important consumption value is “the experience”. But there are five additional patronage values.

The more complete (and strategic) the Landlord is about responding to these values, the more prosperous the future. Strategies like ‘community engagement’ and ‘placemaking’ are tentative steps in the right direction of tapping into some of these other consumption values.

Truth 7: No one knows

No one knows for sure the exact nature and details of what that looks like specifically. But on aggregate, the mall owners can and will figure out what works.

If you are an owner or investor, I hope it is you.

As always, many of these truths must be addressed by spending money. The challenge is to do so when the return on investment is over the horizon, or maybe even unquantifiable. Ultimately, this will be the real differentiator for shopping centre landlords: a commitment to investing in a future with uncertain returns.

I didn’t say it would be easy, or that it wouldn’t require courage; just that it is possible.

Dennis Price: Co-Founder at www.yearone.solutions

Is Elon Musk the Emperor with no clothes?

Like everyone else, I harboured a general admiration for Elon Musk of Tesla fame. A successful, focussed, visionary person who has achieved great success, right.

 I didn’t quite feel the same towards Jeff Bezos - Amazon’s lack of profitability concerns me.

 Then I read this article. (Read in full - well worth it.) Here is a sample:

The key for Amazon making it all these years was to keep people focused on everything but their financials. This is not an exception. Faceberg will never have earnings to justify its share price. In fact, it will never have user rates to justify its ad revenue. It’s not unreasonable to think that everything about the business is fraudulent. That should trigger large scale audits and investigations into its business practices, but Facebook is on the side of angels in the cultural revolution, so its all good.

Probably the best example of our carny-barker economy is Tesla. To his credit, Musk has built a real factory that builds real cars. No one is going to say the Tesla is a work of art or even a practical car, but it is a car and the technology is impressive. The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.

This only works if people think the venture will either one day turn a profit or the technology that it creates will result in something good down the road. To that end, Musk is regularly out doing his Lyle Lanley act, making all the beautiful people feel righteous by backing his ventures. He’s also telling Wall Street that he will soon be making and selling enough cars to turn a healthy profit, even without massive tax subsidies. The trouble is, that’s probably never happening, at least not with current management.

And then there was another article I read soon after - this time with the more usual glowing perspective.

Tesla has safety issues.

Elon Musk’s response to the issue is hailed as exemplary.

Then I thought about it, and I think Elon’s approach sucks.

At it’s core; here is his plan:

“Going forward, I've asked that every injury be reported directly to me, without exception. I'm meeting with the safety team every week and would like to meet every injured person as soon as they are well, so that I can understand from them exactly what we need to do to make it better. I will then go down to the production line and perform the same task that they perform.”

So in essence:

1. Knowing about the individual injury is very important to me as the CEO.

2. I will invest a significant portion of my team in a meeting discussion this.

So far, so good.

3. I am going to meet injured people personally. After you have been injured.

4. I am going to take your incident (sample of 1) and make sure that such an incident don’t happen again.

5. Then I am going to invest even more time by showing you I will get my hands dirty on the do the same job.

Items 3-5 are really problematic for me.

I appreciate that it (a) plays well for the layperson and casual observer, as well as (b) being likely to make the individual feel good and (c) may even mitigate the potential future claims. I get that.

But, here is the thing.

I think a CEO should be more proactive than this. It is great at managing feelings, but I am not sure it will fix the problem proactively.

There is no indication that by fixing everything on a case by case basis will actually ever address the systemic issues.

His approach does not scale.

If a workplace injury has the (pleasant, albeit unintended) consequence of getting the CEOs attention in addition to the time off and the compensation; I wonder if workers will really take the safety issue as seriously as they should?

If you get kissed by a pretty nurse every time you hit your thumb with a hammer, I reckon a few blokes may well be prepared to be a little bit more careless than they otherwise would be.

Safety is fixed on two levels:

  • Processes and systems  (that produce safe work)
  • A culture of taking responsibility, being diligent and looking out for yourself and your mates.

I am not sure that the path Elon is adopting is the quickest way to get any of that fixed.

This article is not so much about Elon. After all, how much can you know about a person from two articles. The more salient take out for readers are this:

There is always another perspective.

Read and learn constantly - things always change.

An open mind is not one that is easily persuaded; but one that is open to consider the facts, and to change a view based on new facts.

Don’t believe everything you read.

Be prepared to go against the popular narrative.

Changing your view is often as a result of the cognitive dissonance, which is not a pleasant experience. But if the Emperor has no clothes on, the Emperor is naked; and that will be a fact and should be called as such.

(Image from https://www.businessinsider.com.au/

Put the cookies on the top shelf, because ...

There are so many misguided  gurus with a platform on social media. But for so many, if you paid a penny for their thoughts, you’d get change.

So much of life, these ‘gurus’ will tell you, is about just being happy. And ther more people hear it, the more they believe it. And then they start saying things like that to their kids. How often have you heard parents say that they ‘just want their kids to be happy.’

The fundamental structure of how humans think is termed a mental model. There is a specific mental model called Hormesis.

Hormesis refers to the idea that nothing is inherently bad or good. In small enough doses, something “toxic” is actually beneficial. Examples include exercise, vegetables, alcohol, radiation, etc. The idea was popularised, or at least well articulated by NN Taleb in his book - Antifragile.

The term is usually applied to these physical or chemical elements as mentioned, but in reality it can be extend to other aspect of our life. Psychologists differentiate between stress and eustress, which is a ‘positive’ stress. Athletes and performers need that nervous energy to perform at their optimal level.

We all need a certain amount of tension to function. The pursuit of happiness is destroying this mental model by labelling everything that is tough as bad.

It is totally dysfunctional, and unrealistic and in fact unhealthy to pursue happiness above all else.

Without the YIN of pain, suffering, stress and tension, you can’t have the YANG of victory, satisfaction and sense of achievement.

Taking the easy way out is not the smart thing to do. Wishing for a business environment without competition and change is not a smart thing to do. Not only will it not happen, it is not healthy. Competition and change and lack of cash are not all inherently bad for you. As someone once said wisely, necessity is the mother of invention.

It may not seem like much fun to compete with, say, Amazon, but without those pressures your business will atrophy and die anyway.

You can’t spend your life in bed drinking cookies and milk, you need to lift, run and strain 

Put the cookies on the top shelf.

Because on the bottom shelf it will get your teeth rotten and your belly fat.

The death of the mall is ...

There are many prognostications on this topic, (Or maybe LInkedIn’s algorithm is just feeding me stuff it thinks I am interested in.)

My argument is based largely on the law of antifragility - as articulated by NN Taleb. To summarise a book that runs to almost 600 pages is risky, but let me try:

First, you have to understand these three ideas, all extracted from Taleb’s book:

Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.

That is the definition of something being antifragile.

An example of something that gets better with stress is for instance your muscles - vigorous exercise puts muscles under stress, but makes it better in the long run.

Getting a vaccine means you are infected with a mild dose of the infection (the stressor), allowing your body to build a better immunity - which is better in the long run.

In the world of business, some competition is healthy and makes you a better organisation.

Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, () the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet.

To be antifragile is not the same as being resilient - that is important to understand.

Crucially, if antifragility is the property of all those natural (and complex) systems that have survived - (AND NOTE THIS…)  depriving these systems of volatility, randomness, and stressors will harm them.

The longer something has survived, the longer it will survive. And NOT putting a system under stress will harm the system. (You can’t Netflix and chill forever - your body will atrophy, right?)

You may be tempted to think that it is silly to argue that something will survive because it always has. But that is the same as thinking that just because things fall to the ground because of gravity, sooner or later it will stop doing so. A law is a law.

Today’s pop music lasts a few weeks, before it's forgotten. Classical music has been around for hundreds of years. Which type of music do you think will be around in 50 years? Bieber or Mozart?

If you could only choose one and had to invest ALL your money, would you rather invest it in a 3-month old startup, or in Commonwealth Bank that has been around (in different guises) for decades?

WHY WILL MALLS BE AROUND FOR ANOTHER HUNDRED YEARS?

Because the mall has been around for thousands of years.

According to Casson & Lee, the origins of the market are obscure, but substantial documentary evidence survives from the eleventh century onward, when chartered markets and new towns were established across Western Europe

World travellers still visit Souks in Morocco. (A souq/ souk was originally an open-air marketplace, historically held outside cities at locations where incoming caravans stopped and merchants displayed their goods for sale.)

So, if markets have been around for a thousand years or more, what are the odds that they will be around in another ten, twenty or even hundred years?

The longevity of the market is not only congruent with the philosophy of antifragility, it makes common sense at the level of ‘behavioural economics.’

Back in the mid 90s, I articulated (in my thesis) the two kinds of shoppers:

  • Type Q: The functional, utilitarian patron who wants a Quick shop

  • Type R: The hedonic shopper who is in a Relaxed state

My little typology never caught on, but the idea of the leisure shopper vs functional shopper did. I also addressed then specifically how the existence of the mall was justified because it met the needs of these shoppers. I postulated then that there are six intrinsic values that are addressed by patronising a mall, and upon review (20 years later) they all still hold true.

I won’t address all, but suffice to say that the mall has (always) been about more than quick, convenient shopping, even though that particular ‘value’ drove rapid expansion at a certain point. Immediate gratification is important, but it is not the only reason why people go to malls.

Commentators have said for awhile now that offline commerce will serve only two purposes: immediacy (stuff you need right away), and experiences (showroom, fun venues). All other commerce will happen online. That is simplistic, but that is a clear.

MALLS WILL BE AROUND BUT THEY WILL BE DIFFERENT

Surviving is not the same as staying the same.

Malls have evolved from open, to closed, to open.

Malls have been transient, became permanent, and if the pop-up fad is anything to go by, becoming transient again.

The salient point is that malls have always, and will always evolve.

Westfield Trade Centre may look very different to a Moroccan Souk, but they fulfill the same purpose. That is, both ‘markets’ address the same six values that people seek from any form of consumption, including patronage of a mall.

As long as the Mall fulfills addresses those fundamental consumption (patronage) values, it will survive and even thrive. (In a future post I will address the 7 immutable truths of prosperous shopping centres.)

Next time you see an article titled ‘the death of the mall’, you can safely skip. An individual mall may die like an individual car may crash; but ‘The Mall’ is no more dying than ‘The Car’ is dying.

If you keep changing (or flipping), you won’t die.

Dennis Price : Co-Founder at www.yearone.solutions
 

Retailing with our eyes wide shut

Do you really want to know what ails our Retailers?

When a group of auto executives returned from a visit to Japan in the 80’s one confided to Peter Senge (world-renowned consultant, academic and author The Fifth Discipline) that they were taken for a ride because they weren’t shown the real factories. One executive told him: “They did not show us the real plants. There were no inventories in those plants. I have been in manufacturing for over thirty years, and I can tell you those weren’t real plants.”

He did not realise that he had witnessed real plants without inventory because that is how Just-in-time production systems worked.

Albert Einstein once wrote: “Our theories determine what we measure.” He was right, because the evidence pointed to theories of relativity and quantum mechanics for many years – before it was ‘discovered.’

This is a universal problem, captured in the fables. We have all read the story of the Emperor without Clothes.

People did not see the Emperor for what he was.

This raises pressing questions for these uncertain times:

  • What do we see? And what is there really to see? Are we merely seeing what we want to see?All the evidence points to the EMPLOYEE being the most important stakeholder, but we hear, see and believe it is the customer. 
  • All the evidence point to retailers not meeting customer needs being the cause of the failures, but we hear, see and believe that it is ‘online’ that is causing the problems.
  • All the evidence point to the fact that we should embrace, even reward, failure, but we are congenitally incapable of admitting failure, never mind celebrating it.
  • All the evidence point to the fact that people don’t buy on price, but every promotion is a price-promotion and we seem compelled to keep discounting.
  • What does this flaw in our nature mean for the things we (think we) believe on all the topics we need to address in order to build sustainable business success? What does the evidence say about brand, markets, margins and distribution? 

The reason we come to believe in some of the things we do, is because once upon a time they worked. But we ended up treating them as a magic formula revealed by ‘our experience’, when in fact they were just a set of conditions that applied at a point in time.

The challenge with dealing objectively with our assumptions, heuristics and mental models, is that they are essentially self-reinforcing: we see what we want to see, creating a confirmation bias that eventually solidifies into unshakeable beliefs.

It is time-consuming, difficult and it may even mess with our sense of identity when we start questioning long-held beliefs. There seems to be very little incentive to embark on that journey. The only reward will be discovering the truth and in the era of ‘alternative facts’ the truth seems to be over-rated.

The reason this is all so hard is because, forgive me for being blunt, we lie to each other and to ourselves.

Some people keep two sets of books: a real one, and one for the tax man. We do the same thing with our beliefs:

We have espoused theories of how the world works. The theories and explanations are offered to all who care to listen. This is what we SAY we believe and tell others what we believe.

Then we have our actual theories of how things really work. Which we don’t share for fear of ridicule or a desire to avoid conflict or whatever.  This is what we ACTUALLY believe.

What are leaders supposed to do about this?

Like any ‘change’ initiative, the starting point is that of ‘mindset’. And let's face it, right now the retail ladnscape is facing massive change.

Leaders need to develop a different mindset about their company.

When a company is run by people with a management mindset, the focus is on planning, organising and controlling.

When a company is run by leaders, the focus and energy is directed towards establishing vision, growing a culture and promoting an openness to learning. You know a company is run by a LEADER by culture that reveals a willingness to challenge existing mental models.

Managers treat their companies like organisations, leaders treat their companies like an organism.

And that is a difference real leaders will know is worth thinking about.

Dennis Price: Co-Founder at WWW.YEARONE.SOLUTIONS

Image: vigilantecitizen.com

If at first you don’t succeed, F*** it

gymnastics-clipart-flip-clipartfest-gymnastics-flip-clip-art_2362-1004.png

Amazon is coming and they will force this upon you if there is any weakness in your business model. Why not pre-empt it?

If you want to have a successful, sustainable business, you need to make strategic moves that effectively flips your business.  This is true not just inretail, but in any business.

Let me explain what it looks like for a business to f*** over.

Those who never flipped

  • Kodak did not become Flickr
  • Encyclopaedia Britannica did not become Wikipedia
  • Dymocks did not become Amazon
  • Siemens did not become Apple
  • Cabcharge did not become Uber
  • Holiday Inn did not become AirBnB
  • Blockbuster did not become Netflix
  • Sony did not become Spotify

Those who flipped successfully

  • PayPal – once was into cryptography
  • AOL – once was into Video on Demand
  • Twitter – once was into Podcast Delivery
  • Avon – once was into selling books door to door
  • Nokia – once was a Paper Mill
  • AirBnB – once was a temporary accommodation for conference goers
  • Netflix - once was into mail order DVDs

Take Netflix for example

They launched as a DVD mail-order business.

Then they jumped the curved and ‘flipped’ their business model to get into streaming

Now they are getting into direct creative production

What Netflix did is irrelevant for your retail business. Except to understand and appreciate the scale and the disruption and the commitment.

They were a successful DVD mail order business and was overtaking Blockbuster. To go into the content streaming business required a fundamental (paradigmatic) shift in business model, skills, cash flow, technology, customers, marketing - on almost every level they have to change.

They are going through another iteration now in becoming primary entertainment producers. And they will have such rich data about what exactly people like to watch, they are bound to have more successes than failures.

(I won’t be surprised if Netflix starts offering services  to their customer base. I am thinking email, home automation, internet of things applications etc would all be within reach, and they clearly are developing the cultural capacity to ride the curves.)

The critical success factors

One: A cultural capacity (willingness + ability) for change.

Two: The strategic skills to identify the right flips to make

Each of those are separate topic to explore in their own right, but in brief just a few points on each:

1  Culture Change:

It is not an objective you can delegate to a subordinate. Whilst someone may be tasked with project management, the CEO and directors have to demonstrably own it, live it and be willingly measured against its success failure.

To succeed at change, you have to understand the systems archetypes in business, and how your structure is connected to your strategy, the staff to the skills, the finances to the systems and so forth.

2. Strategic Flips

Imagine the stages of the lifecycle. (Some brief notes here.)

It does not matter what business you have, it is not that unique and I guarantee that you currently find yourself in SOME stage of the lifecycle. The trick is to make the plans, take the decisions about a new, scary future before it is upon you.  

The challenge is often that the decisions and the short-term results are not in the interests of the current management AND the outcomes are not guaranteed, so there is little cultural incentive to take the plunge. Refer to challenge #1 above.

The key issue is this: working on your flipping strategy should be an ongoing focus.

So the question is: Are you currently working on a strategic f*** over?

If not, the future is as predictable as the shape of a lifecycle curve.

DENNIS PRICE: CO-FOUNDER AT WWW.YEARONE.SOLUTIONS

Retailers fail mostly for this one reason

Do you want to know what lies at the heart of retail failure?

In every retail failure, there is a failure of marketing, if we understand that marketing is not what some shysters want us to believe.

Many believe that marketing is about branding, and branding is about this:

The truth is more mundane: A brand is created by demand.

Not the other way ‘round.

Marketing is merely about identifying the need, then finding a path to that need.

That is putting it very simply. And it is not very contentious. The problem emerges when Marketing loses sight of that very basic task, because they lose sight of what people really want.

People are motivated by pain. People are attracted to disaster. They watch more movies that are violent, murderous and dark, than art house cinema. They laugh when you fall, and feel nothing when you avoid the fall.

More people will stop to watch a street fight than a kissing couple.

People will watch a sporting contest because it is contest and victory is sweetened by someone’s loss.

More people take medication to make a pain go away, than vitamins that will (supposedly) keep them healthy.

People take their car in for a service because they don’t want to invalidate the warranty or breakdown, not because it is good for the vehicle and may extend its life.

The very essence of human nature is one of selfishness: we are tuned into WIIFM - What’s In It For Me. And the most important thing is my survival. And survival means avoiding pain.

When you place your hand on a hot stove, the pain is the signal that tells you bad things are happening. We are conditioned to avoid it.

If it is that simple, why can’t we get it right? Why do retailers keep failing?

Look at how car dealers sell cars: they promise that we will be able to release our inner-adventurer or the wannabe F1 driver that apparently is in all of us. Or at the very least that we all we young and sexy again.

How do we buy the cars? We kick the tires.

Cars have tons of features that we never use. The simple word processor has hundreds of features we don’t even know existed.

How do we buy clothes? We pick the style that won’t us look fat. Or old-fashioned and out of touch. And whether it will last. And is easy to iron.

Yet the brand frauds try to sell to us the idea that we all want to run across the dunes and share tequilas at sunset. And that we will be young again, if only … (their brand).

When marketers fall in love with telling stories about lifestyles that people aspire to, they will do well to remember that the one thing we universally aspire to is to not suck, not feel pain, not be embarrassed, not die, not fail and not lose.

Why do so many retailers fail?

For decades, the only ‘pain’ that retailers took away for their customers was the pain of travelling further afield to find their product. Strategically, retailers survived because their competitive difference was their location.

The advent of the internet made geography near irrelevant. It therefore stands to reason that if they don’t solve a customer’s pain in any other way, there is no further reasons for the customer’s patronage.

You may have the only upmarket footwear store in a particular shopping centre, and that will get only so much trade. The reality I that customers carry another hundred stores in their pocket – even as they browse your racks.

The solution is not big data. The solution is not robotics. Or the ‘experience’. The solution is not a better brand. Or more likes on social media. These things may matter, but they are secondary.

The primary solution is to find out what pains the customer and to offer a solution for that.

Dennis Price: Co-founder at yearone.solutions

When the runway stops

Opening new stores is all about execution. You need to DO stuff. The core skill is project management. When you run out of geography, you run out of growth. It is easier run your business through the copy machine.

But as your top-line growth slows gradually, your expenses don’t (the copy machine is still running). So your sales keep growing (slower and slower) and your expenses grow faster and faster. That is recipe for disaster.

Running out of highway is inevitable.

Then the focus shifts to ideas. To innovation, to productivity, to marketing. Away from projects, to opportunities. From the easy, ‘busy’ work to the hard grind of squeezing little bits of incremental improvement from every process and re-thinking or re-inventing or scrapping processes.

The focus moves from internal capacities and needs and processes to the customer needs and journeys. From ‘our map’ and our capital, to ‘their map’ and their money. We move from footprint to brand. We move from logistics and distribution (supply) to demand and leverage.

In the new world, we need to learn to live with 2-3% growth (marginally better than inflation), and break the addiction to growth.

We have spoken previously about ‘margin convergence’; the idea that traditional retailers will have to learn to live with lower margins and that e-tailers will eventually have to increase their margins in order to start producing some returns for their investors. (Amazon being the exception that proves the rule.)

Just like traditional retailers run out of geography, eventually ecommerce will run out new customers too. There are only so many people in the world, after all.

And the pendulum will swing back and the value of ideas, and innovation and strategy and commitment to change and flexibility and willingness to take risks will again be in vogue.

When your plane runs out of runway, slowing down is no option, you have to accelerate to get lift-off, as scary as that may be.

(Image from goodwp.com)