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5 Strategies Organizations can Leverage to Survive and Thrive in Today’s Dynamic Business Environment

Posted in Big Data, Business Success, Change, High Performance Companies, Industry Change, Leadership, Organization Structure, Organizational Change, Strategy, tagged , , , , , on June 23, 2013| Leave a Comment »

Times | Flickr - Photo Sharing!It can be argued that businesses were traditionally built to be predictable, consistent and stable. Processes were designed to ensure consistent output and to control employee behavior to produce efficient outcomes. I would argue that in recent years the great recession, technological change and other factors have transformed business as we used to know it, into a more dynamic environment characterized by a faster speed of change than ever seen before.

Here are my 5 success strategies organizations can leverage to survive and thrive in today’s dynamic business environment:

1. Accept that Constant and Fast Change is the New Normal

In recent years the business environment has under gone a transformative shift where a heightened pace of change has become the new normal. As David Burstein author of the Fast Future argues:

“The future is coming at us faster and faster, the rate of change is increasing and the amount of change that takes place in a given year is skyrocketing as well. So much change has taken place so fast that our governments, businesses, and other large institutions haven’t always had enough time to fully catch up.”

We are living in a time where anyone has the potential to make an impact. Start-ups can transform technology capabilities and anyone can share a message with the world through social platforms. While change can be daunting, executives need to embrace change and accept that the future is harder to predict than ever before.

2. Leverage the Possibilities of Big Data

Most organizations sit on a mountain of data. Today large, complex data sets can be analyzed to obtain greater business intelligence and statistical information than ever before. This data can be leveraged to improve the customer experience, product/service, logistics, customer segmentation, pricing, customer retention, inventory management and many other factors. David Court, McKinsey Director argues that regardless of whether or not you are a data based company, all businesses can leverage data and analytics to make stronger data-supported predictions and optimize performance by obtaining a broader view of operations. It is important organizations ensure data doesn’t become siloed, so they can fully optimize and take advantage of advanced analytics. Information may not be valuable for long so it’s important businesses exploit it and get utility out of it, to strengthen their competitive position.

3. Constant Innovation

Given the dynamic environment a constant focus on innovation is fundamental. It is important executives recognize that innovations can come from anywhere in the organization. Communication channels need to be open to allow for the free flow of information throughout all levels of the hierarchy. Employees need to be empowered to innovate everyday and share knowledge. To facilitate this change in organizational thinking, employee performance systems will need to be adapted to award innovative thinking as opposed to following corporate created guidelines.

4. Agility

Traditional bureaucratic organizational structures are slow to change and thus not adaptable enough for today’s innovative business environment. Organizations need to be redesigned to be more agile; to adjust in real-time as change occurs.

5. Face Disruption Head On

Almost 50% of the companies in 1999’s FT 500 were no longer in the FT 500 by 2009. It can be argued that while businesses are focused on constant improvement, they don’t always change in the right ways. If we take the case of Tower Records, the former music store peaked and had their most success year ever in 1999. In the years that followed Tower Records continued to improve their operations and efficiency, however they failed to recognize that customer demand could be met better in a new way: through online music; to the detriment of the survival of their business. It is important that companies continually scan the environment in which they operate and constantly research new ways in which they can better meet their customers’ needs.

What other strategies do you think organizations can leverage to survive and thrive in today’s dynamic business environment? Share your thoughts in the comments section below. 

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Retail Differentiation Through In-Store Dining

Posted in Business Success, Industry Change, Strategy, tagged , , , , on December 29, 2012| Leave a Comment »

To combat economic pressures as customers increasingly migrate online, retailers continue to look for ways to entice customers to their brick and mortar stores. One such approach has been the rise of in-store dining. Back in the 1900s many U.S. department stores ran restaurants within their department stores, many of which have stood the test of time. With online retail sales expected to increase by 16% by the end of this holiday season, retail locations are looking to add an experience to their physical stores that the online space can’t offer.

Tommy Bahamas is a flagship example of how lucrative in-store dining can be. The tropical shirt retailer’s 14 (and counting) island stores with restaurants generate 2.5 times the sales of their regular retail locations. Furthermore, the company’s restaurants generate approximately 12% of Tommy Bahamas’ total annual revenue of $452 million. In the company’s new fifth avenue store there is a restaurant on one floor and a bar on another, perfect for that shopping break. Also notable is Tommy Bahamas’ focus on quality, delicious offerings, in contrast to the sub-par food court offerings you would find in the average mall. Check out this commercial of their Myrtle Beach in-store restaurant:

The idea here is that the restaurant is an extension of your brand and the quality needs to be consistent with your retail offerings. CEO of Tommy Bahamas, Terry Pillow describes the reaction fellow CEOs have had to their restaurant-retail concept:

“Fellow CEOs are fascinated first of all that we have it and the second thing they’re fascinated about is that we run it ourselves.”

Indeed in the rise of the hybrid restaurant-retail concept, the trend is for the retailer to run their own restaurant, rather than having it as a concession. One of my favorite clothing retailers Urban Outfitters, have followed suit introducing restaurants into their two Terrain branded home and garden stores. These restaurants play on the popularity of farmers’ markets offering locally sourced food, to give customers a different experience and menu depending on the locale. Terrain’s president Wendy McDevitt acknowledges the lure of the retail-restaurant concept:

“The one thing you can’t get in the cyber world is the tactile experience, and that won’t go away. Food is becoming bigger in terms of entertainment value.”

The in-store restaurant concept is also a great way to increase the amount of time each customer spends in the store. McDevitt estimates that if customers typically spend up to 90 minutes browsing, this can double to 3 hours if stop for a glass of wine or lunch.

Other stores increasing their restaurant-retail offerings include Nordstrom, who are adding contemporary diners and espresso bars to their current eatery options and JC Penney who plan to add juice bars and coffee shops to hundreds of their stores over the next few years.

I think the in-store restaurant concept if executed well could be very successful for a number of retailers, but what do you think? Share your thoughts in the comments section below. 

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Should Your Organization CrowdSource its Strategy?

Posted in New Concepts, Organizational Change, Strategy, Video Blog, tagged , , on May 20, 2012| 6 Comments »

CrowdSourcing is a collaborative open call approach to problem solving and idea creation.  One such example is Google’s Project Glass, which involved the company sharing an idea for future technology and requesting feedback from the public to create consumer driven products.  Recently I read a research paper from McKinsey Quarterly by Arne Gast and Michele Zanini on the idea of crowdsourcing corporate strategy, which I will discuss in this blog post.

Why consider this approach?

So often an organization’s strategy suffers from a lack of diverse perspectives and lack of leader understanding of the operational challenges their employees face.  As a result strategies are often created that sound great in the boardroom but have the opposite impact in practice.  Leaders that fail to consider the implications of their strategic decisions on front line employees, may experience implementation challenges from employees who do not support the organization’s strategic vision.

Benefits of this approach

By incorporating perspectives from front line employees, strategies are less likely to be flawed relative to those created in isolation.  Crowdsourced strategies have the potential to be more insightful and actionable.  Employees are likely to become more engaged as they learn that their opinions are encouraged and can make a difference.  As a result of greater employee involvement, implementation is easier and employees are more likely to support the company’s strategic direction.

CrowdSourcing strategy in practice

Companies that have adopted this approach range from the obvious: Wikimedia to companies that were not founded on collaborative content creation such as 3M, HCL Technologies and Rite-Solutions.  HCL Technologies rethought their business-planning process to create greater transparency and to generate more diverse feedback and insights on their business plans.  In 2009 the company launched an online platform called My Blueprint and invited more than 8,000 employees to view 300 posted business plans.  Interested individuals gave detailed, actionable feedback on the plans and quality insights were obtained. By including others in the process, opportunities for cross-unit collaboration were more easily identified.  Overall crowdsourcing enabled the company to gain fresh perspectives to greater analyze their business plans and focus on specific actions to take to achieve desired results.

While the concept of crowdsourcing strategy is a very new idea, this concept has great potential to improve decision-making, avoid group think, eliminate ideas that would not work well in practice and to create visions that are more meaningful to lower level employees.  What do you think? Would your organization be open to crowdsourcing their strategy? Share your thoughts in the comments section below. 

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Diversification into Unrelated Markets

Posted in Business Failure, Business Success, Risk, Strategy, tagged , on February 26, 2012| Leave a Comment »

This week’s edition (February 20th – 26th) of Bloomberg Business Week contained an article titled (in the print edition) ‘Would You Like Fries With that Title Policy?’ The article reported on the purchase of O’Charley’s casual dining chain by Fidelity National. On February 6, 2012 the title company agreed to purchase O’Charley’s 340 restaurants for approximately $221 million in cash.

Diversification into unrelated markets is not a new business concept, however it is unusual in the current economic environment. Given the economy in recent years many U.S. businesses have been very cautious with growth strategies even in related markets. While growth in general is risky, to attempt to grow through diversifying into unrelated markets has even more risks attached.

The purchase will provide Fidelity National access to three new restaurant brands: O’Charley’s, Stoney River and Ninety-Nine. The later two of the three brands are thriving, however the O’Charley’s brand has struggled in recent years to differentiate itself from other casual dining establishments. Thus the biggest challenge Fidelity National will face is how to turn around O’Charley’s. As Bob Goldin, executive vice president at Technomic, a food industry research and consulting company acknowledges:

“O’Charley’s has been a leaky bucket for years, I don’t know if there’s a miracle worker who could turn this thing around.”

Strategy expert Richard Lynch in his Strategy textbook says that when an organization moves into unrelated markets, it faces the risk of operating in areas where its knowledge of key success factors is extremely limited. However, in the case of Fidelity National its knowledge of the restaurant industry is not as limited as you would initially suspect. The company actually entered the restaurant industry in 2009 forming American Blue Ribbon Holdings in order to invest in two restaurant chains: Baker’s Square and Village Inn. In 2010, Fidelity National bought Ohio-based casual dining chain Max & Erma’s out of bankruptcy; adding it to American Blue Ribbon Holdings.

Fidelity National justifies such expansion as a way to grow and spread their risk across different markets. The company has a dominant share of the title market and little leverage to further expand in this market due to antitrust regulations. The restaurant market by contrast is very scalable with an indefinable amount of growth potential. Adding O’Charley’s to American Blue Ribbon Holdings has substantial cost benefits for the company, particularly in regards to economies of scale on the supply side. As Fidelity National’s Chairman William Foley explains:

“We have been seeking an investment in a larger, scalable, strategic restaurant operating company to complement our successful investment in American Blue Ribbons.”

Richard Lynch acknowledges that organizations can be successful through unrelated diversification if the holding company managing the venture uses strict but clear financial controls. Time will tell if Fidelity National’s purchase of O’Charley’s was a smart move and if they can turn the brand into a success that they could possibly sell for profit. Since the company also holds minority stakes in HR/Payroll system Ceridian and automobile alternator and starter maker Remy International. One thing is almost certain: Fidelity is unlikely to stop investing outside their core business any time soon.

What do you think? Please share your thoughts in the comment section below.

Photo Credit: Wikimedia Commons user: Cloudbound

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