Our friends at Revitalization Partners help companies make better decisions about business operations. This blog from their newsletter looks at the concept of change and if it’s always a good thing for companies. At Juniper Capital, we specialize in private money lending and are committed to sharing business advice that helps you achieve success. We offer hard money loans in Washington and beyond, private commercial real estate loans, private construction loans in Seattle and other cities across the Pacific Northwest and more:
For the past 25+ years, I have gone to the same club for dinner every Friday night. And for over 25 years, club management has always had something on their limited menu that would satisfy my very picky food tastes, until recently. After some 25 years, the club manager retired and a new manager was brought in. The new manager is younger and with help from the board, she made significant changes to the food menu. In the past, no matter what was on the menu, I was always able to get a simple baked potato. But now, the only starch served is rice pilaf, a healthier yet arguably more boring option. While having dinner with some friends one Friday night, I commented on the joys of the “old way” and was promptly reminded: “change is good”.
Upon coming home from dinner, I watched a television news program that did a feature on how difficult it was for high school kids to get summer jobs this summer. The piece pointed out that many of the jobs the kids had held in the past were not available as the stores in malls were closing and that the new jobs were in back office fulfillment jobs, picking boxes from shelves and shipping product. While certainly decent summer jobs, they don’t have the advantage of providing those early skills of how to deal with people, especially customers from both a helpful and sometimes difficult standpoint. But, hey, “change is good”!
The next news story was about Sears closing another 20 stores. In 2017 alone, Sears has closed over 150 stores and is widely expected to be bankrupt by the end of the year. Remember, Sears was the Amazon of its day, with a catalog from which you could purchase literally anything from underwear to a car to even a prefab house. It grew to one of the most successful department stores of its or any time; now to be almost out of existence.
Why? Because management believed that they controlled their customers rather than responding to their needs. And because customers only really respond to their own needs, if they can’t find them met one place, they will go another. Witness the ultimate Sears replacement, Amazon. Founded in 1994, going public in 1997, the company made its first small profit in 2001. Now with revenue of $43.74 Billion, it continues to not make much, if any profit.
But, for the moment, as consumers, do we really care? Many of us buy everything from clothes to tools to books from the company without leaving our computers. The company meets our needs without having to go to the mall, search for parking, look around for the size or color or coordinate a time to meet with our friends. Is it less social? Absolutely! But since most of our interpersonal relationships now take place through sites like Tinder, does it matter anymore?
Several years ago, I was asked to join the board of directors of a venture backed company that was failing. As a board member and advisor to the company, I met with management and asked the what each of their individual strategies was for the company. The marketing director (who lasted about two days following this interview) informed me that the strategy was to show potential customers that the CEO was the next Bill Gates. No matter how hard I probed, that was the strategy. What she and many other executives fail to realize is that there is never another Bill Gates, or Jeff Bezos, or Elon Musk.
As a side note, the investors elected to sell the majority of the company and partner with a new group of investors. With a new management team, today the company is almost a household word in business and is on the verge of a public offering.
When I hear Walmart or Penny’s or any other company talk about their strategy for change as “taking on Amazon or Microsoft, etc. you know that these companies have no strategy for change at all, they are only emulating those companies or executives that created a change that has already occurred. They view their need to change based on where they are coming from, not from where their customers or market have already moved.
Whether you are a manufacturer, retailer, accounting firm or attorney, when you think about change, it cannot be based on where you or your company is coming from, but from the place the market is today, regardless of how far behind your market you may be. Only by creating true change can you succeed in fully serving and keeping your customer or client base. As for me, I’ll still hope I can get a baked potato once in a while.
Revitalization Partners is a Northwest business advisory and restructuring management firm with a demonstrated track record of achieving the best possible outcomes for our clients.