If you need to start a transformation journey, you might be feeling nervous or unsure. There are many complex things going on in your heart and your head. That’s natural to feel or think that way. So, to help you, in this episode of the Retail Transformation Show podcast, Oliver Banks lays out a menu of 10 different types of retail transformation which you can use to pick and choose what will be relevant for your organisation. (Please note, this is a longer episode than usual).
In this episode, discover:
- The 10 types of retail transformation that you could take on.
- What are the key questions you must ask to assess if a type is relevant to your business.
- Which is the hardest type of retail transformation to take on.
- Also, which type will probably be the slowest to take on.
Listen in to the Retail Transformation Show on your favourite podcast app or use the player on this page to listen now.
Last time, on the Retail Transformation Show
Last week, we took a look at a series of rapid, quick actions to take if you’re facing adversity. You can check out episode 52: The 10 Steps To Overcome Adversity now.
However, the focus was definitely on speed. Getting things done quickly. Which if you’re facing adversity in the face is usually what’s needed. Quick actions are good to buy you breathing space in these situations. But they’re unlikely to yield long term changes that truly affect the future outcome of the business.
So today, I wanted to step things up a little for you and look at some longer term actions and approaches to help you transform your business.
How to you feel or what do you think before starting a new transformation?
When you’ve been faced with adversity, it’s sometimes easy to react quickly and get things done. That natural tendency of “fight or flight” can be easily activated.
But then comes the call for a new adventure – starting a transformation journey. But many can be tentative to begin. It’s normal to feel nervous. It’s normal to think of many different aspects.
Perhaps you feel overwhelmed. Maybe, you’re not sure where to start. Perhaps you don’t want to appear uncapable or clueless by your peers, your boss or your organisation. Maybe, you are scared.
Equally, in your head, you may not know the right answer. There are many different ways to prioritise your time, your money, your attention – which is right? At the same time, you might think troubling times might blow over or resolve themselves with another sale or special discount offer.
It’s ok to think or feel some of those things. Actually, they’re perfectly natural.
Introducing, the retail transformation “Menu”
So today, to help guide you on your way to get your transformation started, I wanted to present you with a menu. A range of options for how you could go about transforming your business.
Perhaps you need to focus in on one area. Maybe you need to consider many areas. That will of course depend on your business, the appetite for change and even how honest the organisation can be.
There are 10 things on the menu and for each one, I’ve got a key question that you need to consider for each.
What I’d like you to do is grab a notebook and pen and consider which of these 10 elements should be on your transformation wishlist. If you’re not sure, then the questions that I’m including should help be a clue for you. If you’re really struggling to answer them then that’s a great indication that you need to transform that element.
So, here we go and remember to build that wishlist as we go.
Business model: how does the business generate money
This is the most fundamental area of transformation where you are looking to dramatically change how you make money. Whilst retail is profit making business, this will be important.
Companies like Amazon have set up stakeholder expectations for low or no profits, even to be loss making, for long period of time. However, if you’re an existing business, it’s unlikely that you are in the same boat as Amazon and the expectations that Jeff Bezos has always set.
How to generate revenue
Consider and reconsider what and how you sell. There could be new opportunities for how to make revenue. Consider Amazon as an example here. Their advertising business is booming and growing quickly. Their latest update showed “other” which is essentially advertising as a bright spot in their wider business. In fact, it was something I pulled out as a key focus for how they’ll be shifting and transforming their business in the future. Take a listen to episode 41 to find out more.
Amazon have considered how they generate revenue to transform their business. Could you do something like this?
Mergers, acquisitions, partnerships and collaborations
You could also look at partnerships, acquisitions and collaborations as an option to add capability or focus on how you make money.
An example here would be how Tesco decided to acquire Booker. By merging with the large wholesaler, Tesco opened up more channels to market and a number of cost saving synergies and opportunities. They also recognised convenience as major growth channel. So, by adding Booker customers and capabilities, they acquired a chance to rapidly grow this area of the business.
Find out more in this document from IDG.
Of course, it doesn’t need to be just by buying companies though. Next have recently announced partnership with Amazon to drive traffic to stores. Ocado work with retailers to help them tackle grocery online shopping. Even consider M&S’s merger deal with Ocado where they looked to rapidly get started with online shopping.
If you could add capability to your organisation to help you grow, scale or operate, what would that be? How could you find this capability?
How to do this
To do this, you’re going to want to dive into your financials and business fundamentals. Work with the finance team to better understand the intricacies of the P&L, the cashflow and other areas.
You’ll need to understand how your costs spread out across the organisation. Are they attributed clearly for how you make sales? If not, then you’ll not really understand the profit that you’re making at each stage or in each area.
Research how you can then use benchmark information to gauge if you’re on track for different areas of the business. What’s letting you down?
Business model transformation isn’t easy but it does give you a huge opportunity to really turn things around and reset the fundamentals of your business. It’s probably worth pointing out here that if you are transforming the business model, you’re probably going to want to also include many of the other elements of how to transform too.
Key question: What areas of your business make your revenue and what makes your profit?
The old adage of “revenue is vanity, profit is sanity” still rings true. So, do you understand what areas of the business generate your profit? If not, you must to revisit your financials to understand detail more.
Strategy: how you sell and how people buy
Here, you must look at where and how people are shopping. This has changed rapidly over the past few years – obviously with the advent of ecommerce, but also social media and the rise of other retailers such as Amazon.
Review your channels and routes to market
It’s critical to continue to review your channels and routes to market. And, you must make sure that they’re clearly integrated which makes sense to consumers.
Physical stores and online are the obvious channels for you here. There have been plenty of recent examples of these two channels working well together. Essentially, if you have a physical presence in an area then you see an online performance boost too.
Social media is also another growth area when it comes to channels. We’re seeing Facebook and Instagram offering the opportunity to buy directly from their apps. Snapchat too have flirted with retail too. With so many people spending so much time on social media, I think we can probably guess the direction of travel here. The social platforms are going to want to keep people on their platform rather than letting them click through to your website, so expect to see this as another major series of channels for your business to be present in.
Marketplaces have been on the rise too. Amazon represents a huge opportunity to present yourself to customers – in the place and in the way that they are currently shopping. You may also look at more partnerships too to increase your routes to market with things like shop in shops or even cross promotional work.
Review your store portfolio
You should also be investigating your property portfolio to ensure it’s the right stores of the right size in the right place. Obviously, with long leases, this may not be a quick fix although there could be break clauses or other options open to you – such as CVAs (Company Voluntary Arrangement) in the UK. You should have a view on store by store performance and be able to assess how your ideal portfolio would be different from what you have today. It’s likely that you’ll have a tail of poor performing locations.
Hopefully, you can resolve these by analysing lessons and opportunities from other stores. But, if not, then it may unfortunately be necessary to “chop the tail” at some point. However, you must investigate how you could improve poor store performance first.
Identify and analyse your competitors
I’m sure you’re familiar with your competitors. But who are your real competitors – it may not be just the “old enemy” now. Consider how customers are solving their problems. Some of this will be through retailers like yourself. But some will be through perhaps online pure plays retailers that you’d not considered.
In fact, indirect competitors may also be a challenge. These are companies who are not selling exactly what you sell but are selling something similar from your customers’ perspective. For example, Netflix are selling entertainment although they perhaps might not be a classic competitor.
By understanding and analysing who your competitors are, you can learn from them. Adopt some of their ways of working. Disrupt how they are serving your customers and make sure that you’re not leaking customers and money.
Disrupt or be disrupted
We’ve all heard a lot about the bit industry disruptors. Uber, AirBNB et al. Many of these come from analysing how people are shopping and significantly changing critical parts of the story for customers. Often, this is about eliminating the pain points or friction. For example, hailing a cab and not knowing how much it will cost.
Rather than waiting for your business to be further disrupted, why not look to disrupt yourself. Consider where the pain is in your business journey. What would it mean to completely evaporate or pulverise that? How could you do that?
Taking this approach could lead you to new innovations and avoid future disruption and failure. However, to do this, you need to transform how your business views the strategy and future direction. Look to get on the front foot rather than waiting to fall onto the back foot.
Key question: Where and how are your customers shopping?
If you don’t understand this, then it’s likely that you won’t even understand why your customers are moving elsewhere. You’ll be left scratching your head. We’ll be coming back to customers in a little bit too!
Brand: who is your company any what does it stand for
The saying goes: “your brand is what people say about you when you’re not in the room”. Well, I have to ask – what do they say about you?
Have a purpose – be relevant!
Let’s just be very clear here – the point of purpose is so important in today’s crowded retail marketplace.
If you’re a regular listener to the Retail Transformation Show, then you’ll know this already. It comes up and up again with my special guests and my own views.
With so many different competitors to choose from, why should people choose you? The answer is because you serve a purpose that makes you relevant to them, their lifestyle and their personal viewpoint.
If you have no purpose, you have no personality. Your brand will become bland. Mediocre. Boring.
Look to your history and what your founder originally envisaged. Investigate what has caused significant periods of growth in the past. Look to your corporate point of view. Look at what makes you unique. All of these serve as good pointers to your purpose.
Take a listen back to episode 25 to understand more.
Once you understand your purpose, you must make sure that you’re actually delivering on it. Don’t let good intentions become hollow, empty promises. You must work out how you will actually live by your reason for being.
Company values that serve your purpose
What does your company or brand stand for? What does it stand against?
These are critical to surround your purpose and will help bring it to life. These will set the tone and expected behaviours. In turn, they’ll guide your people to serve your purpose.
Plus, they’ll appeal to customers too. If you have values in line with their perspectives then there will be a more natural affinity between your customers and your brand.
However, again, like purpose, you must bring them to life. If a core value is about sustainability, then really challenge yourself. What makes you sustainable? What sacrifices are you making to be sustainable? Is every decision guided by this? Then consider if that is enough when compared to other businesses.
If you aren’t making a significant step forward compared to others, then consider if it is actually one of your values or if it’s just a nice buzzword that you want to be affiliated with.
Customers will sense if the nice words are really something that you live by.
Branding that sets the scene
The final element of a brand transformation that you may want to consider is classic branding.
Here, as the name suggests, consider the visual elements of your brand – logos, colours, icons, graphics etc. Are they aligned with your purpose and values? Do they mesh well visually? Are they setting the right scene for your customers. If you’re trying to be an ultra high fashion retailer, then an old fashioned logo probably isn’t right. If you’re then trying to mix pastels and bright vivid colours then that will grate with people. How many fonts are you using and do they work well together. If there a type of photography that needs to be consistently used.
It sometimes sounds obvious but time and time again, you see companies mix so many confusing styles. And make no mistake – that confusion embeds itself into your customer’s brains!
However, don’t just consider visual elements. Also consider your tone of voice too. Is it consistent? Does it talk to your customer?
When it comes to branding, you must get into the mindset of your customer – and the bombardment of information and brands that lays siege to their eyes, hearts and minds in every minute of every day. What is going to make your brand stand out?
Key question: What is your reason for being and how do you bring that to life?
That’s right, the key question here is about your purpose. If that’s not clear, you have a clear next step here! That purpose will drive everything in your business. It will give your customers a reason to shop with you. It will inspire your workforce to work and try hard. Ultimately, it will guide the future of your business and be a part of every decision.
Customer: who are you meant to serve
Whilst you can’t transform your customer, it is possible to transform for your customer.
Who are your ideal customers?
I’ve seen huge benefits come from identifying an ideal customer. You need to be able to clearly define and understand who you want to serve.
Having an ideal customer of men or women aged between 16 and 100, with a pulse isn’t targeted enough. You’re ending up trying to be all things to all people and will end up being nothing to nobody.
You need to make your ideal customer a specific person. Give them a name. Understand their life. Get under their skin.
By having an ideal customer, you will be able to assess your business through their eyes. You’ll know how to talk and communicate to them. Will your shopping experience make sense for them? In addition, you can even use them to define what propositions you offer. So, by tailoring your business to your ideal customer, you’ll look to appeal to that avatar and people like them.
Also, it is valuable to back up your ideal customer avatar with research – to make sure that it represents real people. In addition, this will help you work out if there are enough real people to make your business work.
It’s also worth pointing out that you can have different ideal customers – not just one. But, they’re connected with your other ideal customers by a common challenge that you can solve for them.
Find the right number of customers
With an ideal customer in mind, you must acquire real customers. You can use your ideal customers to find real customers because you know how to talk to them. You’ll understand where they can be found and what they’re interested in.
Then, you’ll want to make sure that you have ongoing research to continue to understand your customer base. Why are they shopping with you? What parts of your business speak directly to them? Also, be sure to continually ask what they’re challenged by or struggling with. From there, you may find opportunities to continue to evolve your business to help them.
If needed, adjust your ideal customers as you find out more about what parts of your business are working (and leading to profitable results).
Communication to customers
The final part of a customer transformation is to change how you are actually talking to customers. How you’re communicating with them. People communicate through many different channels now-days. Social media and email are important, but also not the only ways.
Investigate how can you tailor your communication (including adverts) to your ideal customers? By combining your ideal customers with your purpose, you’ll have a perfect way of communicating.
Also, how are you calling your ideal customer to action? How are you going to encourage them to come to your store, click to your website or engage with your brand? Having a clear call to action (CTA) is important – don’t confuse with multiple CTAs all at once.
Consider how communication could be more than just a “buy this please” message.
Key question: Who is your ideal customer and what’s their challenge?
Having an ideal customer alongside your brand’s purpose will help you build relationships with people. In turn, you’ll have the opportunity to convert them to customers and even earn loyalty and repeat business with them.
So, if you’ve not got a clear idea of a specific target customer, try building one out and seeing how your business works for them.
Shopping trips: the experience of shopping with you
Retail is still ultimately about shopping. So, the shopping trip must be a critical consideration when looking at how to transform your business.
Your mission, if you choose to accept it…
Your customer will have a number of different journeys or missions that they will be aiming to fulfil each time that they visit your brand.
That will be everything from looking for initial inspiration – through to wanting to make a purchase. And don’t forget post sales support and returns too. The customer journey doesn’t stop at the moment of sale. All touchpoints reflect on your brand.
So make sure that you define and understand the different missions that your customers want to do. Then consider how you can help your potential customers or customers complete each one easily or successfully.
Flow and experience for physical stores and online shops
We’ve already discussed how you can use channels to appeal to customers. Physical stores and online shops are important but you must consider what the journey is for each. Also, how does that “multi channel” shopping trip exist when people are continually switching between channels for the different missions that they’re carrying out.
What is the experience that they get on each channel and at each point? How does each channel and each point make a person feel? How would you ideally want them to feel – and how could you evolve to make this happen?
Ultimately, you must ask if these two channels, physical and online, work together? They should do! Your customers certainly want them to.
Using analytics to understand and optimise
As people shop your stores or site, you must be ready to optimise these. Consider how you can use data to guide this development. Heatmaps can be a great tool to understand how people shop with you and what is driving results. From there, you can them look at sharing lessons across the customer journey, finding new opportunities and setting up A/B style tests.
We’ll be coming back to data and analytics a little later on…
Key question: Why are people shopping with you (what’s their mission) and how do you help them complete that?
Understanding why and how customers are shopping with you will help you to help them. There are going to be a range of missions that people may be visiting you to complete. Not everyone is coming to buy every time, particularly for certain categories and price points. With the advent of our current, digitally enabled world, customer shopping missions are less defined and harder to track than they used to be. However, your objective should be to help customers complete their missions and move towards purchase and repeat or referral business.
Product: what you sell, but not what customers buy
In a literal sense, retail boils down to the exchange of money for a product or service. So, in this instance, I’m going to refer to services as products too.
However, people aren’t wanting to buy your product or service. They’re wanting to buy the outcome that your product results in. That’s probably a solution to their problem or a part of achieving their goals. Maybe they’re wanting to buy a feeling. Perhaps they’re wanting confidence, or admiration. Maybe they’re looking for peace of mind.
Whichever, they’re not actually looking to buy the physical collection of raw materials that you happen to be selling. Understanding across the organisation is important to make your overall transformation a success.
Not being a commodity
With so many competitors, it’s likely that your products are available elsewhere. This is dangerous. When your products become commoditised and available from other sellers, how will your business stand out?
Afterall, we live in a world where, as Ian Shepherd points out in his book: Reinventing Retail, “someone is going to sell your product at cost or even less.”
So, how are you going to stand out? Do you have a plan for that? Because you need one! Part of this comes down to purpose. Part of it comes down to your product and range too.
Defining the uniqueness in your offering is important to avoid becoming bland or boring.
Are your products good value?
You probably realise that there is a difference between low cost and good value. However, the rise of the discounters is resetting how that value equation works.
In fact, companies like Aldi are offering high perceived quality and low perceived price. You’ll notice that I intentionally use the word “perceived” in there as value is in the eye of the beholder. If people believe something then it becomes more true than the reality. With the rise of review trustworthiness, this is becoming a particularly pertinent point.
As you consider how to transform your product range, consider how you can reset the perceived value too.
In addition, you may also need to review the COGS (cost of goods sold) based on your increased understanding of where your profit is generated – as mentioned earlier.
Understanding the product lifecycle
Do you understand how customers use the product? You should consider the expected (and actual) life of the product. Will they be wanting to make a repeat purchase? Will they want to buy add ons or accessories?
Also, consider what happens at the end of life. As sustainability becomes an ever increasingly hot topic, how will you help customers to reduce, reuse or recycle products?
Key question: What problem does your product range solve for your customers?
In our world where you have many competitors, it’s important to know exactly how your unique product range and offering (including price point) helps solve your customers problems. Ultimately, your customers are looking to buy the solution to their problem, not the product that you’re selling. However, hopefully, the product that you’re selling does actually solve your customer’s problem. If so, everyone is a winner. But, to do this, you must understand the problem that your customer is trying to solve in the first place.
Operating model: being intentional with how things happen
An operating model is a way to set up your business that repeatedly delivers the expected ways of working. An operating model is a structured way of running any part of your retail business. It adds process, standards, priority and order to the complex ways of working. Plus, it puts in place the resources that allow that to be delivered in a consistent, repeatable way.
Defining your operating model
The first stage is to define your operating model if you don’t already have one. If it’s not understood then there can be misunderstanding and assumptions across the workforce. Equally, if it’s not up to date then there can be confusion about how things should actually work.
The first stage therefore is to define an operating model and ensure that it is doing what you want it to do. It’s important that your operating model allows you, as a business, to achieve your purpose and stay in line with your values.
Stock flow and logistics are increasingly essential
With the ongoing rise of online shopping and the ever-increasing expectation of consumers, it’s essential to have a very clear understanding of how your stock flows. You must understand your supply chain. “End to end” is often used as a term but it’s important to look not just to the “ends” within your company but look outside too. Both upstream and downstream. By working with your suppliers and partners, you can find opportunities for better collaboration, faster logistics or reduced operating costs.
Forecasts help grease the wheels
It’s essential to be able to accurately forecast stock movements and sales to a product level. By doing this, you’ll be able to ensure maximum availability and minimise product waste and reduce the amount of working capital tied up in product unwanted sitting in warehouses or store rooms. It will also help with your workforce scheduling to make sure that you have the right size store teams matched to demand for stock replenishment and customer service.
Predicting the future precisely is of course tough in a volatile environment such as retail with many factors at play, but something is better than nothing.
So, if you’re doing forecasting in a detailed way, investigate how you could do this and soon you could make a transformation to how your stock and resource is used effectively for customers.
Key question: What are the critical elements of your operating model that actually add value?
If you don’t have a lean operating model then you’ll have excessive costs and risk them spiralling out of control. Understanding which parts of your operation add value for customers is important to develop a lean operating model.
People: the company’s most important asset
People are often referred to as a company’s most important asset. Certainly in retail, the workforce will be one of the most costly items in the P&L. But, are you looking after you people like they were your most important asset?
Leadership and culture
Your leadership and culture can be the brakes or the jet fuel for your transformation. A true willingness to change, led from the top can mean the difference between success and failure.
Leadership and culture are obviously two huge topics in themselves so I’m not going to attempt to cover them here.
However, what I will say is that you should look to learn from other leaders and other company cultures to work out what will fit your business. The leadership should be driven by your purpose and the culture will be driven by your values. Misalignment between what you say and what you do will result in negativity coming in which can disrupt the ideal culture that you aim for.
Finally, culture can be enabled and supported by ensuring that you develop people in the right way. Equipping people with the right skills and tools to do their jobs will result in a happier workforce that feels confident and ready. Without adequate training, the risk is that people feel overwhelmed and collectively feel stressed out. They’re scared to make mistakes and the culture will suffer as a result.
It’s also worth pointing out that these elements aren’t quick fixes but instead take years of steady alterations and change management to slowly adjust the culture.
Structure and organisation
If you’re researching and reading about structure, you’ll probably discover how some firms like Facebook are finding success with a flatter structure with fewer layers. Whilst this is a key trend, I personally believe that the large workforce of retail, combined with the distrusted nature of people across shops, warehouses and offices means this isn’t achievable.
Instead, your structure should allow every team member to have a relationship with their boss or manager. This relationship can be used for coaching, feedback and support. In turn the team should level up and be able to achieve more.
If you were to take a lesson from the modern flat structures of Facebook et al, then take the concept of ensuring there are sufficient team sizes at each level. There is probably little point in having only one person reporting to one person who in turn only reports to one person. That sort of structure will add bureaucracy and admin workload. In addition, it adds extra need for communication up and down each level which will lead to “Chinese whispers” and will frustrate everyone in the end.
Each part of your organisation should still continue to drive towards your overall purpose or should be responsible for a key part of the purpose. If the overall purpose is unclear then this can cause misalignment and siloed behaviour.
That siloed behaviour is likely to be seen by your customers who find themselves coming up against barriers and obstacles as they try to work their way around your ecosystem. Plus, siloes tend to result in disruptive conversations internally. In turn, making changes becomes more difficult and life is stressful as parts of the organisation attempt to move in opposite directions.
Workforce management to optimise
Another important element when it comes to transforming your people, is how the organisation enabled by effective workforce management techniques. Putting in place the right policies, procedures and tools allows you to effectively schedule the right people into the right place at the right time. And as we’ve already discussed, people are the most important asset. So shouldn’t they be treated and used effectively as the most important asset?
Key question: Why should your teams serve your brand and your customers?
Having a workforce without a purpose is just about paying people to turn up to work. Give them a purpose however and you can turn them into brand advocates that show incredible care towards your brand.
Obviously, the first part of this is to define your company purpose. From here, communicate that purpose and intention to your teams and inspire them to strive to achieve that same purpose. In turn, that will give them not only a reason to turn up for “work” but the opportunity to be part of something bigger.
Systems: using technology to make things happen
Another important element of making an operating model work is to have the right systems in place. Older retailers have to deal with older “legacy” systems that are deeply embedded and often rather fragile for handling todays’ data demands.
There are many different systems that sit behind retail operations. Whether you are thinking about systems that deal with people information: be it customer systems handling sensitive personal information through to workforce and personnel systems which organise HR, payroll and much more. Then, there are systems to deal with stock ordering from suppliers, stock volumes as well as those that deal with customer orders. Plus, there are financial systems that are responsible for taking money, paying money and everything inbetween. Also, there are many levels of working systems that enable each part of the organisation to do their part of the operating model.
With so many different systems, it’s easy to feel like it might be better to avoid touching things. Which is true! It is easier not to touch. But that also won’t set you up for future success will it.
Look at which elements are business critical and creaking
The first priority should be to assess which systems are both business critical and which are creaking from their excessive heritage. These are the first items to focus on to preserve ongoing business viability.
Are you a tech company?
When it comes to systems, you could take one of 3 broad options:
- Develop your own systems with your own IT systems.
- Customise your own systems with a supplier IT team.
- Use out of the box systems from a supplier.
To help you decide which is the best strategy, you must consider if you are a “tech” company or if you are a retail company. By using out of the box systems, you can make changes much faster but you’ll need to flex your business and ways of working to how the default system works. You must make sure that your business is flexible and can adapt to changing processes for this to work – otherwise you’ll end up with an unused system and lots of non-value add activity to circumvent the system functions.
For very large companies, you may have IT capability and complex integrations. In this case, it may make sense to sort things yourself. Whilst this will be slower to build something from the ground up, it will be perfectly tailored to your business and ideal operating model. It also allows you to add functionality as you see fit.
Something in the middle of course buys you the best of both worlds but needs a good partnership to ensure that the requirements are clearly understood. The challenge here is that more customisations end up costing you more. Particularly if you’re looking to continually innovate and bring new propositions to market.
Which is best for you does depend on your IT capability which only you can decide.
Key question: What is holding you back from your ideal system setup?
Firstly, what would be your ideal systems setup? How would you want things to work and to integrate? From there, consider what’s getting in the way from just doing this. List out the key barriers that you’d face and then consider how you can overcome these.
Success: what does winning look like for you?
The final element of transformation that I’d like you to consider is about what success looks like. Traditionally, this has been measured from the shareholders’ perspective. Profit, dividends and growth.
However, as the retail market continued to come under strain, it may be that you need to look at your metrics and analytics to optimise your business and maximise performance.
KPIs drive behaviour
I’m sure you’re familiar with the concept of KPIs driving behaviour. We, as humans, strive to succeed; we strive to please. In addition, we also have an incredible ability to simplify things. So, when we put a KPI in place, we want to improve that or hit the target – but at the same time, we want to find the easiest way of doing that.
So, KPIs that are not properly understood can be “gamed” and they can drive bad behaviours in an attempt to get a slightly better score on the metric.
Those bad behaviours could involve cheating or lying, it could involve reprioritising things for the sake of the metric rather than doing the right thing. Another example could be playing scheming tactics over a longer time period to show improvements. I know that I’ve come across examples of all of these myself and I’m sure you can think of some examples too.
So, when you’re thinking about transformation, you should look at how to minimise the likelihood of gaming the system. Also, consider how you would cheat the system to maximise your success rate and then look at how the metric or process could be altered or automated to minimise the chance of this happening.
Reporting should change the future
Reporting is an offshoot of KPIs in as much as it presents performance to the business. The aim is to give that helicopter view to managers and leaders throughout the organisation to help make better decision making.
The feedback from reporting should be a way of coaching people in the organisation with a view of improving the future. What’s happened already has come and gone. Now, we must look to the future.
However, consider if your reporting is actually having an effect on changing the future or if it is just a way to create a story about the past.
Trends and forecasts can be a simple way to enable this and I’d recommend that you look at this as soon as possible. With increasing power with tools like Tableau and Power BI, we now have access to great real time analytics.
Just don’t get that classic case of paralysis by analysis. Don’t get too absorbed by the numbers that you forget to actually take action on what it is telling you!
Key question: What does success look like for your business and how would you know if you’ve achieved that?
With the evolving retail market, you should consider what success looks like. The classic example here is that your physical stores may lead to online sales. Traditionally, these haven’t been attributed to stores which then does not encourage store teams to recommend online channels.
So, what would success look like across your organisation?
Then you must consider how you would know if and when you achieve that success. Having the right metrics and reports in place allow you to monitor and track how you’re doing.
What is on your transformation wish list?
Having been through all 10 options, which types of transformation are most relevant for you? I’d love to know – you can either leave a comment here or email me at email@example.com.