Why do retailers do the obvious things wrong?

Why do retailers do the obvious things wrong?

I have been prognosticating about eCommerce for more than two decades. On balance I have been mostly right. But this is not about that, and I’ll explain shortly. First some context and some examples to set the scene:

Back then Y2K loomed large. YET to be launched was MySpace, Wikipedia, Facebook, Dropbox, Kindle and pretty much every organisation that dominates the internet today. In fact, 2000 was the year the dot com bubble burst.

I helped launch the first internet venture (Compuspace) in 1997, a year before Google Search and PayPal. This piece was written in Feb 1999.



I have been writing on Inside Retail (Australia)on this topic for 8 or 9 years, so my record is in the open.

And it got me thinking about whether I was lucky or smart or whether there was something else.

Unfortunately, it is the latter. (I am smart enough to know I am not smart enough.)

Consider this case study on Lend Lease - a previous employer.


My conclusion in a paper I sent to the executives snipped from my archives below. In short, I advocated that they DON’T play the eCommerce game (how did they go for any of the Landlords who tried?) – but instead to focus on ‘infrastructure’. That is, focus on logistics, focus on owning the routers the cables the switches and to own the highways and the portals of the internet – whatever that may look like; and NOT try to be a ‘retailer’.

Where would Lend Lease be if they listened in 2000 and spent the bounty received for MLC on internet infrastructure? (Cisco Systems traded at around $15 at the beginning of 2001 – after the dot com bubble - and at around $45 in 2018. A bit better than Babcock Brown.)

The modern take on this would be to be the ‘platform’ rather than a player or an aggregator.

Not one landlord (to my knowledge went there) but then again, Kodak did not become Flickr, Encyclopedia Britannica did not become Wikipedia and so forth – so there is a proud history of great companies not doing the obvious things.

This post is not (much) about MY perspicacity, but to pose a serious question. 

A misreading of this article would be to conclude that I am (humble-)bragging. I am setting the context because I want to illustarte that I am not being a wise-ass after the fact.

If someone with no special skills, no special training, no special insight living in a third world country (at that time) could 'know' these things; why do organisations not embrace/ address the obvious? They had to be reasonably obvious to MANY others, and they had fancy strategic planning departments doing the heavy lifting. Now that these things have come to pass, companies are surprised - and go broke – having failed to address what is obvious.

The key to being smart about the future that will play out boils down to this: understanding the difference between things that are fundamental and things that are transient. Any trends/ shifts/ technologies that enable the fundamental attributes or needs of people are bound to succeed and if not, likely to fade as a fad.

There are more than these, and Maslow’s hierarchy is a good starting perspective, but consider for instance that people are:

-          Social beings (status conscious, self-expression, interaction)

-          Selfish beings (see comfort, seek self-advancement)

-          Insecure (demanding, needy etc)

-          Inquisitive (learning, experiences etc)

In the light of the above, you can judge whether these ‘trends’ likely AR or CRYPTO are likely to last or fade.

I guess many people look at the same things and come to the same conclusions.

Why do companies then NOT respond to the obvious shifts that tap into the fundamentals of human nature?

In my concluding remarks to those Lend Lease executives, I made what I believe is to be an important observation: focussing on the present customer needs stifles innovation. Steve Jobs said something similar – the customer does not know what they want. (“It is hard to design by focus groups because most of the time people don’t know what they want until you show it to them.”)

Managers focus on the present because the present is where bonuses are paid. That is why:

•        Cabcharge did not become Uber

•        Holiday Inn did not become AirBnB

•        Blockbuster did not become Netflix

•        Sony did not become Spotify

And given what I already said about the fundamentals attributes of human beings, managers too will always look out for themselves first, and consequently lazy, present-focussed incumbents will always be replaced by hustling, future-focussed newcomers.

There are ways to avoid premature demise of great institutions, for instance:

1.      Boards should structure their remuneration practices to reward future-focussed innovation. (Including rewarding worthy failure.)

2.      Companies should stop focussing on ‘wellness’ and ‘diversity’ initiatives (for their own sake) because social engineering is not the mandate of a business. (There is a better way.)

3.      Strategic plans can almost entirely be scrapped, but at the very least should treat competitor behaviour as irrelevant.

4.      Throw most of your qualitative market ‘research’ in the bin.

Will ANY corporation follow this advice? No chance whatsoever.

In fact, here is a test: The more outraged readers are with these suggestions, and the more strongly convinced they are that I am wrong will be an exact indicator of how committed they are to popular tropes and memes and consequently how wedded you are to the present/current zeitgeist as opposed to being open to a different interpretation of the future.

And that is why - eventually - a new Netflix will replace the Old Netflix.

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