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Demand or Command Economy



ROI by Frank J. Rich







By Frank J. Rich




The trouble with transition models is that if you don’t have enough propulsion to get you to the new model while you’re leaving the old, you could fall into the abyss. Habits die hard, so when the transition is from “brick and mortar” models such as manufacturing to digital media and channels, the tendency is to circle the wagons to protect the last vestiges of the old—revenue you can count on—and snap up the new when it appears, as though sushi on a conveyor belt. All this while holding less and less inventory.

Historically, we’ve relied on the balance between production and consumption to fulfill market demand. You build it, hold it in inventory, promote it, and then pick it off the shelf for delivery. Like most exchange models this one too is based on confidence. But things have changed; consumers have turned into “simplifiers,” more in search of what they need than what they want—and for good reason.

The current economic malaise has left us with low employment, negative consumer credit leading to increased savings rates—each percentage point representing roughly $500 billion in spending—and increased debt, a gray cloud that chokes the enterprise from endeavor. Together, they have reduced the energy for consumption by over $1 trillion. Such coping mechanisms are habit forming—behavior that is hardest to form and hardest to break. In 2009 people were forced to examine their means; they have now learned to choose to live below it, a habit government might benefit from. Deficit spending is a well-endowed short-term catalyst to growth, a shot in the arm—at least history would confirm, our current recovery model in point. Long-term measures target the foundations of monetary and fiscal policy, things like paring expenses until funds meet the demand for them. To be clear, supply must grow to meet demand, and not the other way around.

But with demand so low, what must we build or imagine that might shake consumers into an exchange of goods for money? Perhaps, it is no less than products so embryonic that the need for them is yet undefined. Auto repair done at one’s home or office, framing parties (aka Tupperware) that get all those photos and prints tastefully on the wall and out of the attic, bicycle clubs for the unfit everyman riding rental equipment, the return of home delivery trucks that bring us organic everything like milk in a bottle, etc. Defining such markets is fundamental economics—see need before desire. Simplifiers are like that!

The Command Economy

The obverse side of demand is command, as in controlled—the centralized control of all means of production and attendant resources that provide birth-to-death products, services, and support of all things deemed “necessary to the common good,” at least by the controlling entity. When feeling angry over one’s state of disenfranchisement, voting alignment with those who promise to ease your burden (by giving you your due) touches the deepest pain in people—the desire to be “as good as” another—something psychologists agree comes by a realistic self-assessment and personal achievement. It is not something one can give to another. We will not find what we are looking for if we don’t venture out to seek it.

Such Hobbesian conflation proves dependency a greater influence on poverty than one’s birth circumstances. Its purpose intact; a command economy educates, equips, and produces only that which sustains itself—the natural law of survival. It equivocates need and want, a system that exorcises diversity. As such, freedom to choose may become the defining anachronism of the American way. Luckily, it is still our choice.



August 11, 2017 |

The User as Innovator


ROI by Frank J. Rich







By Frank J. Rich



Let’s talk about the customer now that we’ve spent some weeks on the tools that we use to predict his behavior and that help us make decisions about how to get him and keep him. The traditional approach to the customer is to divine what he needs or wants. Sometimes, we go as far as to actually look at what he is “in the habit of buying.” “Everyone has a refrigerator; let’s make those.”

But there is more to the customer than meets the eye. Not least, it’s the stuff of innovation. Most innovations (unique products, services, and applications) are called user innovations. They are called this because the developer expects to benefit by using it.

Most users are innovators at some level. We have all found ourselves saying something like, “They ought to make those gas caps with quick-release mechanisms to avoid getting gas on your hands and to get through the dirty job of pumping it quicker.”

It’s the way we are — creative beings. That sense in us, not coincidentally, is what informs our buying decisions, what makes us the consumers we’ve come to be. We either like the way something is made or its ability to solve a problem, satisfy a need, add value — or we don’t.

A manufacturer innovation, on the other hand, is one in which the developer expects to benefit by selling it. In the traditional, manufacturer-centered innovation model, the manufacturer identifies user needs (what he believes), develops products at his expense, and profits by protecting and selling them. It’s the model that first comes to mind, but not the one that produces most innovations. The model responsible for most innovations is the user-centered innovation paradigm, or “democratized” model.

Back to the Future

If customers are innovators, then doesn’t it follow, that no matter how many of some kind of something there is on the market, there is room for something new and exciting? For some the answer is a definite NO! Henry Ford is known to have quipped, “Who needs another kind of auto? You can have any kind you want from Ford Motor Company, and in any color, so long as it’s black.” Back then, he was right. That is, until new models from others came along and the basic black for $400 wasn’t everyone’s solution to how to get around.

For others, the answer is a definite YES! Apple, Inc. is the latest and greatest example of product innovation. But where do their products come from? Who would have guessed that the MP3 player, then struggling to displace portable CD players, would find market traction in a reincarnated form by an alien name? All would agree that the iPod, its fundamental workings much the same as MP3s already on the market, would tickle the fancy of music lovers the world over. Truth be told, it was more than unique design that sold the iPod; the product came with a music store and solved a copyright music nightmare by selling, of all things — singles!

Users have custom needs, that when satisfied by an existing product, are most convenient. It’s what makes consumers of us. The job of the manufacturer, then, is to package, attractively price, make readily available, and improve the product. In software, we call that “upgrades.” Generations of products reflect this process of improvement.

When not satisfied, customer needs often turn into products. We know from our study of the “Use Model” that the greatest competition facing products is the alternative use of the same resources. Customers always find the solution they seek; either an “adequate” product or service already in existence, or one they create. That is, when we need to drive a nail into a wall, and a hammer is not available, we might use the end of the screwdriver that’s handy. Such solutions are called proximal alternatives, and when found, often become the choice of habit — a key element in the consumer’s make-up. The resultant product might be a hammer that is also a screwdriver when needed. Auto key chains often contain high-intensity mini flashlights, arising out of a “custom need” for an additional, and often, vital function.

Users, it appears, are responsible for more product innovation than any other groups, including designers and manufacturers. Bet I can guess the question in your mind — “Why don’t we ask ‘users’ what they are using to solve their problems; satisfy their needs?”

Studies show that consumers are not very vocal about the things they need. Oh, they complain a lot; but that may be more a cultural bias than a clear indication of the solution on their minds. You know how it is in the conference room. Those that complain, “It won’t work” are usually not equipped with the solution that “will work.” Ninety-seven percent of customers won’t tell you of their dissatisfaction. Of those that do, ninety percent will not tell what’s at the root of it.

We can conclude, then, that it’s important to look into the mind of the consumer, and not just the voice of the consumer. This is what Eric von Hippel of MIT discovered many years ago, and which informed his Lead User Model of innovation. Take a look at the list of products below — all user innovations.

                           Gatorade                              SW Spreadsheet

                            protein shampoo                feminine hygiene

                       mountain bike                    climbing piton

                           sports bra                           Wite-Out Liquid

                         Graham Cracker crust       chocolate milk

                                 email                                    desktop publishing


August 4, 2017 |

The Carrot and the Stick


ROI by Frank J. Rich







By Frank J. Rich



A life’s journey has a way of imprinting experience. The learned application of its lessons often requires the reflection that cements the meaning in things, and the motivation to employ it. The oft spoken “carrot and stick,” as a motivator, is root to more initiatives than first imagined.

I’ve spent time with horses, the fabled partner in the eponymous expression, whose natural and acquired behavior reveals the design in the idiom. Any that have animals around—dogs, cats, chickens, and livestock—know well the habitual tracking in each that gives insight to human behavior. In the end, we may not be far from instinct in most things we do.

In the workplace, increased productivity is the “striving for” that fuels opportunity and growth for employees. Coupled with profits, the model is a successful blueprint of a simple business ethic. In postwar Europe, the productivity wane was the result of a fading value in productive endeavors. As “The Daily Advertiser” reported in 1948, the economic difficulties facing the continent were the malaise of a workforce easily employed, but less given to productive outcomes. “Productivity has fallen because the compelling incentive to produce has disappeared,” it concluded. Not entirely the fault of plentiful jobs and social service schemes, the era’s worker found little partnership with motivation. There simply was not enough value in it.

The idea in the “carrot and stick” approach was to offer a combination of rewards and punishment to induce good behavior. Its original context named a cart driver dangling a carrot in front of a mule and holding a stick behind it. The mule followed the reward (the carrot), while avoiding the stick behind it, since it feared the punishment of pain, thus moving the cart forward. We may liken it to the psychology of income tax payment. We fear the IRS, but are motivated to deliver a timely tax return each year to put the fear of an audit behind us. It is perhaps why so many overpay their taxes and set up a reward (refund) at tax time.

Bonus incentives are a takeoff on the original model. Promised, but less often realized, the bonus spurs individuals to greater performance (theoretically). It ceases to work when bonus goals are viewed as unrealistic or seldom met by work teams. The punishment is the termination of those who fail to meet goals.

Much of what we do involves a similar effort at motivation. We might excite good behavior in our children with the promise of ice cream, use of the family car to a teenager in return for good grades, a tasty treat for Fido for performing a nifty trick, etc. The root motivator in us all is the self-actualization that fashions rewards—pride in achievement, joy in making another happy by what we do, the thrill in risk taking, etc.

While fear is not a successful long-term motivator, it is in the tissue of most, if not the driving force in the things we do. Fear of failure complicates more lives than the wisdom that “man doesn’t make mistakes, mistakes make the man.” That notwithstanding, most are hard-pressed to employ the discipline that proves results. Few become “expert” at something for the unwillingness to put in the “practice that makes perfect.” How many more start piano lessons than actually develop the everyday skill to enjoy playing the instrument? “Of course, I took piano lessons as a child, didn’t everyone?”

July 28, 2017 |

Grass-Cutting Contemplations …


ROI by Frank J. Rich







By Frank J. Rich



Contemplations may be the issue of the contemplative, those given to time alone and solitary activity. For these the imagination grows with available time. Most have their place—the shower, a comfortable chair, the “hours after the hours,” walks to nowhere, the littoral gazing across the sea. For others, it may be the opportunity in a singular chore or enchantment that works to separate us from the rest of everything for those moments of reflection, imagining, and the forecasts that raise the spirit. They are the times when plans form, or the anxiety that attends them wafts away as perspective grows; even routines—cooking, cleaning house, washing the car, or painting a fence—that ask only our time and little thought to achieve it.

Not unlike so many that find their way to a place untouched by others, in stolen moments, I am at peace riding a mower. The practice is an imperative for any with property to mend and care for, listening for the cadence that makes measured turns and speeds second nature, until contemplations take the wheel. The activity is at once mindless and mindful, its near-naked cousin able to occupy time, space, and matter simultaneously. Einstein and Rosenthal made math of the artifice, while the rest have simply fallen into its gravitational sleep without thinking.

This gait has no equal; it is mine alone—the same, I imagine, for you. I see new ventures, alternative social solutions, a greater sense of my investment in others, the unique ways the creator has knit me, the model of construction or repair that has needed more skill than I own. Time for all things is suddenly available to me. I consider song, literature—largely my own—kitchen creations, the God of our world, how to do the impossible like bringing two parties together. All things may come into view—TV series, high school memories, mother’s words, gravity, ways to encourage new customers to local shops and craftsmen.

It’s summer, the season of growth—a warning for some to take stock, for others a time to consider the simple world around us. These are the common things—the gratification in a freshly cut, lush lawn, the character of breezes, warm, moist, even warning of storms ahead, and homegrown tomatoes. No other season can produce them, not even Amazon can cause them to appear at your doorstep. Little else is so cherished than a gift of them to neighbors yet unfolded to seasonal joys.

Kierkegaard claimed “I have walked myself into my best thoughts.” Rousseau asserted “my mind works only with my legs.” Thoreau called walking “a sort of crusade, preached by some Peter the Hermit in us,” to reclaim the holy land of deliberation and imagination. Eric Klinger, and other psychologists, suggest that this “daydreaming and fantasizing” is a “reminder mechanism” that helps to separate oneself from busyness, thus keeping “larger agenda fresher in mind.” It’s a time to let the “adaptive unconscious” take control of the wheel, when “feeling” becomes the only form of self-reliance.

Today I’ll take a swim in a nearby lake, listen for the sounds and song of it, and try to be still for the longest time busyness allows. I hope to see you there.

July 21, 2017 |

Greatness: Is It In You?


ROI by Frank J. Rich







By Frank J. Rich



Some years ago I was introduced to a thinking model that presumed something very unusual. It was that the world we generally perceive is not at all the one that delivers the happiness we seek. Some of you might shrug at the notion with a knowing twist of the head. “Of course,” you might say; “this world is no paradise.” The proposition, according to this model, was to see the world for the opportunity in it, and to celebrate what’s right about it.

A common expression of the model was to say: “If you spot it, you got it,” when asked about the special way in which its followers viewed things. The parallel to business (of this model) was striking, at least in my mind. Our striving after greatness, I wondered, may be no more than a point of view. Or, alternatively, was it simply born in some and not in others? So, which is it?

Are we but the unsuspecting product of natural selection, or a work of purpose in our lives? There is no denying that some are so naturally inclined to achievement that it’s easy to just assume “they’ve got it and others don’t.” Others, no less successful at their attempts, seem to bear fruit by the sheer force of their labors. What does it take, then, to achieve greatness— is it inheritance or inspiration?

Solomon may have been the son of David, a king among kings, but he amassed a wealth greater than any single man in history. His achievements are legend. But how did he accomplish them? Francis Ouimet may have been the greatest golfer to seldom play the game. Was he a natural, or a product of the effort he put into it? Tiger Woods, no less, appeared to be unstoppable as the greatest golfer alive—not a bad result for someone who had been playing the game daily for 29 of his 31 years. Did Kobe Bryant just ooze talent, or were his basketball skills the effluence of hard work and extraordinary discipline? Was Steve Jobs just blessed of good timing to find himself back at the helm of Apple, and doing extremely well, or was the road back marked by obstacles and overcoming?

Research has demonstrated that the lack of natural talent is irrelevant to great success. The secret: arduous and demanding practice and hard work. Warren Buffet (Berkshire Hathaway) may have an extraordinary knack for making the right investment moves, but his success in market matters is more likely the result of his legendary discipline and long hours spent studying the financials of investment targets. Contrary to his own view, research suggests that he was not “wired at birth to allocate capital.”

Frankly, we do not possess a natural gift for a particular job. And while it is true that our so-called natural gifts do incline us toward greater performance at some things more than others, job-specific natural gifts do not exist. We are not born publishers, CEOs, or enforcement officers, though some things unique to us do prepare us better for some jobs over others. The conclusion is that we will achieve greatness only by hard work over much time.

Jim Rohn, management and motivational guru, claims that the answer lies not in what we do but in what we don’t do. “The things I found to be easy to do, others found to be easy not to do. I found it easy to set the goals that could change my life. They found it easy not to do it. I found it easy to read the books that could affect my thinking and my ideas. They found that easy not to do. I found it easy to attend the classes and the seminars, and to get around other successful people. They said it probably really wouldn’t matter. If I had to sum it up, I would say what I found to be easy to do, they found to be easy not to do. Years later, I’m a multi-millionaire and they are all still blaming the economy, the government, and company policies, yet they neglected to do the basic, easy things. In fact, the primary reason most people are not doing as well as they could and should, can be summed up in a single word: neglect.”

Experts are remarkably consistent in their findings—talent doesn’t mean intelligence, motivation or personality traits. It’s an innate ability to do some specific activity especially well. The irresistible question—the “fundamental challenge” for researchers in this field, says the most prominent of them, professor K. Anders Ericsson of Florida State University is— “Why”? How are certain people able to go on improving? The answers begin with consistent observations about great performers in many fields.

ex nihilo, nihil fit

Nothing comes from nothing! Nobody is great without work. In other words, there is no substitute for hard work. It is nice to believe that if you find the field that uses your natural gifts, you’ll be great from day one, but it doesn’t happen. There’s no evidence of high-level performance without experience or practice.

Reinforcing this “no-free-lunch” finding is vast evidence confirming that even the most accomplished people need around ten years of hard work before becoming world-class, a pattern so well established researchers call it the ten-year rule.

What about Bobby Fischer, who became a chess grandmaster at 16? Turns out the rule holds: he’d had nine years of intensive study. And as John Horn of the University of Southern California and Hiromi Masunaga of California State University observe, “The ten-year rule represents a very rough estimate, and most researchers regard it as a minimum, not an average.” In many fields (music, literature) elite performers need 20 or 30 years’ experience before hitting their zenith.

Greatness then, isn’t just handed over to anyone; it requires a lot of hard work. Yet, even this isn’t enough, since many people work hard for decades without approaching greatness or even getting significantly better. What’s missing?

The Practice in Potential

The best people in any field are those who devote the most hours to what the researchers call “deliberate practice.” It’s activity that’s explicitly intended to improve performance, that reaches for objectives just beyond one’s level of competence, provides feedback on results, and involves high levels of repetition.

For example: simply hitting a bucket of balls is not deliberate practice, which is why most golfers don’t get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day—that’s deliberate practice.

Consistency is crucial. As Ericsson notes, “Elite performers in many diverse domains have been found to practice, on average, roughly the same amount every day, including weekends.”

Evidence crosses a remarkable range of fields. In a study of 20-year-old violinists by Ericsson and colleagues, the best group (judged by conservatory teachers) averaged 10,000 hours of deliberate practice over their lives; the next-best averaged 7,500 hours; and the next, 5,000. It’s the same story in surgery, insurance sales, and virtually every sport. More deliberate practice equals better performance. Tons of it equals great performance.

Certainly some important traits are partly inherited, such as physical size and particular measures of intelligence, but those influence what a person doesn’t do more than what he does; a five-footer will never be an NFL lineman, and a seven-footer will never be an Olympic gymnast. Even those restrictions are less severe than you’d expect—Ericsson notes, “Some international chess masters have IQs in the 90s.” The more research that’s done, the more solid the deliberate-practice model becomes.

Just Folks … like you and me

All this research is evidence of what great performers have been showing us for years. Winston Churchill, among the greatest orators, practiced his speeches compulsively. Vladimir Horowitz is credited with saying: “If I don’t practice for a day, I know it. If I don’t practice for two days, my wife knows it. If I don’t practice for three days, the world knows it.” He was certainly driven, but the same can be said for Arnold Schwarzenegger, who took six Mr. Olympia medals, Tiger Woods, or Peter Drucker, who learned enough new to write a management book at age 95, the year before he died.

Successful CEOs read an average of four business related books a month. The reading habit of most Americans is to read one book a year. In football, all-time-great receiver Jerry Rice—passed up by 15 teams because they considered him too slow—practiced so hard that other players would get sick trying to keep up.

Tiger Woods is a textbook example of what the research shows. Because his father introduced him to golf at an extremely early age—18 months—and encouraged him to practice intensively, Woods had racked up at least 15 years of practice by the time he became the youngest-ever winner of the U.S. Amateur Championship, at age 18. Also in line with the findings, he has never stopped trying to improve, devoting many hours a day to conditioning and practice, even remaking his swing twice because that’s what it took to get even better.

The Workplace

The evidence, scientific as well as anecdotal, seems overwhelmingly in favor of deliberate practice as the source of great performance. Just one problem: How do you practice business? You guessed it. Many elements of business, in fact, are directly practicable. Presenting, negotiating, delivering evaluations, and decoding financial statements—you can practice them all.

Still, they aren’t the essence of great managerial performance. That requires making judgments and decisions with imperfect information in an uncertain environment, interacting with people, seeking information. These, too, can be practiced. It’s all about how you do what you’re already doing, how you imagine the work, and yourself doing it.

Report writing involves finding information, analyzing it and presenting it–each an improvable skill. Chairing a board meeting requires understanding the company’s strategy in the deepest way, forming a coherent view of market changes and setting the tone for discussion. Anything that anyone does at work, from the most basic task to the most exalted, is an improvable skill.

A Mind That Matters

Armed with the mindset of performance improvement, people go at a job in a new way. According to research, they process information more deeply and retain it longer. They want more information on what they’re doing and seek other perspectives—the very definition of growth. This difference in mental approach is vital—mindset is the key.

Feedback is crucial, and getting it should be no problem in business, or so you’d think. Yet most people don’t seek it; they just wait for it, half hoping it won’t come. Without it, as Goldman Sachs leadership-development chief Steve Kerr says, “it’s as if you’re bowling through a curtain that comes down to knee level. If you don’t know how successful you are, two things happen: one, you don’t get any better, and two, you stop caring.” In some companies, like General Electric, frequent feedback is part of the culture. If you aren’t lucky enough to get it, seek it out.

Be The Ball

It’s common advice from tennis instructors, but just as useful in business. Build “mental models of your business”—pictures of how the pieces fit together and influence one another. The more you work on it, the larger your mental models grow and the better your performance.

Andy Grove could keep a model of a whole world-changing technology industry in his head and adapt Intel as needed. Bill Gates, Microsoft’s founder, had the same knack. He could see at the dawn of the PC that his goal of a computer on every desk was realistic and would create an unimaginably large market. John D. Rockefeller, too, saw ahead when the world-changing new industry was oil. Napoleon was perhaps the greatest ever. He could not only hold all the elements of a vast battle in his mind but, more important, could also respond quickly when they shifted in unexpected ways.

It’s a lot to hold on to, but not as valuable without one more thing—deliberate practice. Do it, and with regularity. Simply, it’s about being what you hope to become.

The Existential “Why”

For most people, work is hard enough without pushing any more. Those extra steps are so difficult and painful they almost never get done. But, that’s the way it must be. If great performance were easy, it wouldn’t be great but ordinary, which leads to possibly the deepest question about greatness. While experts understand an enormous amount about the behavior that produces great performance, they understand very little about where that behavior comes from.

This is where research loses its way, because observable behavior may not reveal the heart, and it is here that we find the motivation to carry on … often to greatness. My own experience suggests that high performers are believers in the value of the “thing they do.”

I often ask clients if they believe in what they’re doing. “If they stutter when they talk,” I suggest to them, “it might be why they stumble when they walk.” Greatness is no existential catwalk in which the delicate balance of life is at issue. The fact is that we can make ourselves what we will. But that requires that we first abandon the idea that our “hidden talent” will appear at the precise moment when the balance of our lives is perfect, a view that is tragically self-limiting and leads to self-defeat. Rather, the liberating news is that greatness is not reserved for the “gifted” few, but is available to you and me.


July 14, 2017 |

Crazy …?


ROI by Frank J. Rich







By Frank J. Rich



The opportunity in most things is hidden treasure. We seldom see what’s in plain view until another has made great use of it. Think Play-Doh, smelly insulation in its original guise and Silly Putty, the accidental combining of boric acid and castor oil. Though many come to mind, few were apparent at first glance. Why would anyone build a new mobile phone in the midst of a dozen competitors having trouble growing a 20 percent share of market? Clearly, all could do the math—(100/12 = 8.3%). That notwithstanding, while others were building mobile phones, Apple Computer designed and delivered a new use model for the ubiquitous “hip cricket.” The rest is history, as they say.

So, what is Amazon management thinking in buying Whole Foods? While many are scratching their heads over its recent bid for the landmark quality organics-bred and “brick- and-mortar” food chain, the reasons are both apparent and jointly held. It’s Amazon’s data strategy that is at the root of the offer and one that may transform retail as we know it. Oddly, there’s nothing new or strange about the idea that getting to know one’s customer leads to greater sales and a secure “retention revenue model.” From the use of POS (Point of Sale) systems in the seventies, retailers understood the potential in “data collection and use” as they began to track inventory to grow operational efficiencies and move a little closer to the needs of customers. Fast forward to “the consumer” and big data looms as the way to spike retail sales by the very principles that have existed since the first exchange of goods and services in kind.

In tomorrow’s (Amazon’s) model, every transaction is recorded, every buyer is known, every inventory change recorded, and every possible next order can be suggested based on what visitors buy and browse.  It is the secure belief that all data must be collected, analyzed and used—a very different model than the practice of most retailers today. It may also be the reinvention of retail’s future. A majority of major retail brands list data mining and analysis as the largest of their investments. Not coincidentally, they share another view— the belief that their industry is at risk of falling prey to creative destruction, that which transformed the media advertising industry since 1995.

The signature idea is to enhance the customer experience by warming to their needs and presenting the choices that encourage the freedom to uniquely qualify all in the process. Individuals are made of their choices, unique and fulfilling. Retail has always succeeded when sensitive to this fundamental insight. The net—if you don’t have a big data strategy that includes multichannel marketing, you will fall victim to the destructive innovation that is building steam in the marketplace. Its root motivation is a shift in consumer spending away from products and toward experiences. Of course! A good customer experience is the holy grail of retail. What each retailer does to enhance this vital relationship will determine whether they sink or float atop the wave of destructive innovation that is rising in the marketplace.

Successful retailers find ways to expand relationships with their customers which are fueled by exceptional “customer service, creative loyalty programs, and unique, authentic in-store and online experiences.” Finally, retailers will need to leverage technology to maximize their multichannel efforts and to better understand customers and the consumer at large. Millennials for example, wield purchasing power in excess of $200 billion annually. As always, our youth distinguishes themselves by their approaches and attitudes to form their unique profile. Those that have resisted multichannel operations are on a short rope. A narrow focus on a particular channel will fail in the long run for most, since only a multichannel approach will succeed in time. All retailers must move to it to maintain market share.

A recent retail sales marketing survey suggests that “… retailers successfully leveraging multichannel marketing realized a 36 percent increase in sales in the past 12 months and are expecting a 27 percent increase in the next 12 months. More importantly, survey respondents indicated they’ve seen a 40 percent increase in new customers in the past 12 months.” Those that fail to embrace multichannel marketing will continue to lose market share.

Finally, a strong workforce, one that’s trained and conversant in products and brand, particularly for local retailers, is fundamental to overall customer service.  Rising labor costs, scarcity, and employee retention are key to building a skilled workforce, dedicated to its brand and core philosophy—a critical cog in the wheel of retail success. Consumers want access to products on their terms and will develop lasting relationships with those who meet these expectations. The workforce must rise to the demand for knowledgeable, helpful, convenient, and goal-directed assistance.

July 7, 2017 |

Real Growth


ROI by Frank J. Rich







By Frank J. Rich



Despite economic growth over the past 4 to 5 years, the consensus view is of an underperforming economic sector worldwide. Our tendency toward quick results—The MacDonalds Syndrome”—opens wounds impatient with the oft misunderstood model of real growth. This is a model of fundamental shifts to adjust the long-term elements that produce desired growth.

 A country’s gross domestic product grows with investment and productivity, and an expanding labor force. Consumption does not drive growth, but is the result of it — the conventional wisdom among those who practice the dismal science of economics. We can be lucky or wrong in our forecasting of economic outcomes, but seldom patient enough to wait for our economy (or our children) to grow out of their bad habits. The hope is that this past recession helped clear the view that fundamental changes in the ways we think and do were necessary.

Households’ share of an economy is typically 40 to 50%, which partly explains why the U.S. economy has grown despite a lackluster retail sector. It is, rather, the maximization of consumption that matters more than consumption itself. The key question is, “Are increased productivity and the rising wages that result, boosting consumption?” Such efficiency insinuates a positive long-term view of growth that consumption alone cannot.

This “inside the belly” view is applicable to local small business that mistakenly narrows its focus on marketing efforts to drive deal buyers to the checkout counter — the folly in the Groupon phenomenon.

Instead, small business would do well to identify with product needs “under ever changing circumstances,” such as school days, holidays, traffic highs and lows, convenience products, and shifting marketing efforts, applying the creative use of traditional media while adding new media access systems, and not least, the customer service that informs a good customer experience. “Delivery,” as an added value is a good example. Think Amazon.

Recent performance in the auto segment suggests consumers may have shaken off the “China worries the stock market faltered over. Increased car sales is good news because most are financed; so Americans are showing confidence in their ability to meet payments over time. However, if the sell-off in stocks worries the Fed, interest rates may remain low, encouraging further gains that spell economic growth.

The big picture aside, every small business must see clearly the “market influencers” and the ways to affect local markets with their unique approaches to winning customers.


June 30, 2017 |
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