20 Practical Performance and Profit Pillars continued --- Page 3 Culture This is a critical pillar of the direct merchant. Again, I come back to the vision and to the intentional approach to creating a company. Positive cultures do not happen spontaneously. Positive cultures are intentionally instilled from the vision. The company described earlier has a founder who has all of the cultural attributes for success: passion, compassion, thirst for knowledge, dedication to quality and service, politeness, a giving nature, mentoring, caring for others, fairness, patience, and a reasoning approach to solutions and problem-solving. Consequently, he has surrounded himself with vendors, employees, industry leaders, even customers who value and respect those attributes. He has, in effect, intentionally created his work culture to support and mirror his vision. That is a remarkable achievement, more so because it is designed and pre-determined. This cultural center for a company radiates in all directions. It radiates out to suppliers and vendors and is returned to the center as preferential status by them. It radiates out to customers and is returned to the center as customer loyalty and retention. It radiates internally to employees and is returned and re-directed outward to suppliers, vendors and customers. And it radiates within the employees and is returned to the corporate ‘family’ as harmony. As a result, this company uses its culture to drive a customer-dedicated attitude that has won the hearts, minds and wallets of its loyal customer base and, further, growth through word-of-mouth. Another client defines culture more as a performance attribute. In this company, employees are imbued with the culture of independent decision-making, responsible choices, accountability, and customer-centric activities and actions. As a result, this company uses its culture to drive effectiveness and efficiency while it uses its distribution model to serve customers flawlessly and quickly. In both instances, the foundation pillars intentionally are linear: vision; product; distribution model; culture. Each successive pillar is intentionally created to meet the defined requirements of the preceding foundation pillar. Neither company could have been created without this step-by-step intellectual design. People The finest restaurants use the finest ingredients; that’s how they achieve greatness. The greens are just picked within an hour or so from the kitchen garden behind the auberge. The filet of trout has been plucked from a local stream that afternoon, nested on wet grape leaves and refrigerated until the sauté pan is hot. The crème anglaise is prepared fresh from cream from the local organic dairy and fresh Madagascar vanilla beans. The finest businesses are no different. They have the finest employees. They choose them with care and attention to quality. For intentionally great businesses, only the best people will do. That’s how 4-star businesses are built. You see the ‘People Pillar’ when visiting various companies. In the great companies, the people are happy, enthusiastic, open, smart, and full of ideas. In the not-so-great companies, the people are uninspired, dull, closed to ideas or change, a bit obtuse, don’t know any of the numbers, and haven’t had any ideas in quite a while. In the great company, the people lead the way. In the not-so-great company, the people wait to do what they are told. They were once people looking for a great culture to become a part of; now, they are just ‘employees’ with a cubicle and a so-so health plan. All too often, the reason for people mediocrity is money. The owner is simply not willing to spend what it takes to get the top ingredients. That is a short-sighted approach to people and culture and it only guarantees perpetual mediocrity. It’s all about choices. Like the radiating cultural center of an organization, the people radiate outward and inward. Mediocre people depress customers. Mediocre people depress suppliers and vendors. Mediocre people depress each other. When you do a forensic review of a diseased company, you find extreme territoriality, hostile politics, near non-communication, lack of common goals, manipulation, and outright stupidity. Ah, but those rarified reviews of healthy companies—such sweetness and progress; such laughter and trust; such joy in the work. And it is intentionally created and maintained. A business owner or leader who sculpts the profile of the people on a daily basis winds up with a work of art. If you begin with the best marble available, you have a much greater chance of creating a wondrous, lasting and satisfying work of art. If you have a clear vision, great products, a compelling distribution model, a dynamic culture, why wouldn’t you furnish it with the very best people you can find? Why would you risk everything on mediocre people? It cannot ever make sense. Tools The sixth linear foundation pillar is tools. Call them what you wish: ERP, Systems, IT, Operating Systems, and on and on. They’re tools. They are what people use to get the job done better, easier and faster. If you don’t have good tools, you don’t get good results. You can buy cheap tools that always need fixing or sharpening, or you can buy quality tools that will serve you well for a long time without a lot of costly repairs or down-time. The real measurement of the utility of the tools is the output productivity. Generally, the better the tool; the better the productivity. One of the most notorious causes of business failure throughout the multichannel world is bad tools. Either they are the wrong tools or they don’t work or no one knows how to operate them—often, all three. And then we try to cover up the problems so the board of directors doesn’t notice. Seems to me the problem may be at the board level. How did the company get stuck with bad tools to begin with? For all of those whose tools are deficient, there is a little known fact: there are good tools out there that work. The intentionally designed companies almost always have great tools. They have spent time understanding exactly what they need, how the tools need to work in their niche environment, how they can be adapted, and what needs to be built in for the future. Then they spend lots of time training great people on how to operate the tool and how to get the greatest possible productivity out of the tools. And when it is all humming along, they begin studying what they will need next and begin adding new tools to the bag. The 4-star companies also make sure the tool operators are dedicated to the vision of the company rather than to the tools. In our history as direct merchants, we have caused way too many customers to be brutalized by the tools. At their worst, the tools are in charge and that is always fatal. Tools have to be egalitarian; that is, affirming, promoting, or providing equal competitive, economic, cultural and visionary outcomes for all the people who must satisfy the customers. The tools cannot be only for merchants, or accountants, or marketers. They must serve the common master: the customer. The tool must exist only to fulfill the desired outcome of the linear foundation pillars of the business: to sell more stuff to more people any way we can. Niche Depth Our business is now prepared to engage in business. We have the vision, the products, the distribution model, the culture, the people and the tools to be successful. To some degree, the products have necessarily emanated from a niche market and are a fit in that small or large market segment that has been chosen. I remember a couple who carved out the equipment and music niche for square dance clubs. He sold all of the portable sound systems used by mobile square dance callers as well as complete collections of karaoke-like sound tracks that they could play and then call live. It was a small business, but they owned it all and they made a very nice living from it until they sold it a year or so ago. The secret to the business was they knew everybody in the square dance world; all the dancers, all the callers, all the square dance promoters and dance hall owners. They belonged to all the associations and attended all the contests and festivals. If somebody was going to buy new equipment or music, they bought from my friends. They had niche depth in a small market. On a much different scale, I think of a company that will soon do $500 million in a large industrial products market. They are not the largest player, but they have solid footing in all of the major product categories within the larger niche market. They also have 30 years of experience in the market and the company has had the same owner from the beginning. That person knows this niche market. That person also understands the potential of the distribution model. This is a niche depth that will lead to aggressive geographic expansion as well as competitive acquisitions. Like the square dance product company, this group belongs to all of the associations, attends all of the conferences, and is a ‘go-to’ source for everything in their field. Both of these extremes of niche depth describe companies that work very hard to know more about their niche than any other company. They are involved, committed, supportive and active in the niche that gives them their success. They are leading their niches forward, making a difference, taking a leadership role for the future. And what they get from that niche depth is information, contacts, opportunities, and word-of-mouth, all of the benefits that accrue to the company with deep and solid foundations. |
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