BrainTrust Query: Retailers Should Be Fast ‘AND’ Data-Driven
Through a special arrangement, presented here for discussion is a summary of an article from Applied Predictive Technologies’ Retailing with Confidence blog.
Recently, I had the pleasure of reading Jim Collins’s new book, Great by Choice, which prompted me to re-read his classic, Good to Great. In re-reading Good to Great, I noticed that many of the ideas that Mr. Collins espouses are applicable to retail organizations today.
One idea, "the genius of AND over the tyranny of OR," is particularly timely. A common refrain from senior leaders is that in today’s chaotic environment, there’s not enough time for structured decision-making; there’s not enough time for a test to complete before deciding on rollout. In other words, executives often settle for "we can be fast or data-driven … but right now, we just have to be fast."
This idea strikes me as poor thinking in two ways. First, decisions driven by "gut" or anecdotal evidence are more likely to be incorrect. In this "tyranny of OR," retailers are both more likely to make the wrong call, and doing so more rapidly. This is a double whammy which compounds small problems into big ones.
Second, I fundamentally disagree with the idea that you can’t have both fast decision-making AND data-driven decision-making. The solution to "fast AND data-driven" decision making is planning. To have the right answer in March, you need to be testing ideas in-market in January and February. To have the right answers in August, you need to be testing ideas in-market in June and July. So on and so forth.
Long-term planning around supply chain and merchandising issues is a discipline in which retailers excel in some areas. Retail organizations routinely order product six to 18 months in advance.
Testing to drive innovation is no different.
One related and pernicious argument against planned-and-orderly-testing is that the business environment is changing too quickly, and that today’s results aren’t useful tomorrow. Doubtless, trying to predict the general macro-economic environment is frustrating and challenging: Will Greece eventually default and drag down Europe and the global economy? Will unemployment recover? Will there be any "shocks" that drive up fuel prices and drive down consumption? I don’t think anyone really knows. However, I do know exactly which solutions retailers will rely on to overcome any challenge: merchandising mix, pricing and promotions, marketing message, marketing vehicles, customer relationship, etc. In other words, no one can predict the problems tomorrow will bring, but we know exactly what’s in the toolbox to fix these problems. Isn’t it beneficial to sharpen our tools for whatever problems the future might bring?
- What Retailers can Learn from Jim Collins: The Genius of AND Over The Tyranny of OR – Retailing with Confidence
Discussion Questions: Which of retail’s disciplines — merchandising, marketing, pricing/promotions, labor, etc. — could most benefit from a more disciplined planning process? What steps should retailers be taking to ensure more data-driven insights can be tapped in today’s frequently rushed planning process?