Failure is an orphan

“Victory has a thousand fathers, but defeat is an orphan.”

- John F. Kennedy

If you’ve been on the receiving end of consulting firm or marketing agency pitches, perhaps you’ve noticed multiple firms taking credit for the same work.

Or maybe you’ve been part of an event celebrating the launch of an exciting new venture and witnessed how suddenly everybody wants to participate or to extol their contribution.

My personal favorite is the CMO who relentlessly bashed a new business idea we had, did absolutely no work on the project and then showed up uninvited to our press party–which was in a different city than our headquarters–and managed to insert himself in between our CEO and the head of our new venture just as the press started snapping pictures.  And there he was the next day on the front page of Women’s Wear Daily and Ad Age beaming.

Of course when something fails, everyone scuttles like cockroaches when the lights come on. And it’s not too hard to find someone to tell you that they knew what a stupid idea it was all along.

But when was the last time you celebrated a noble failure?

When was the last time someone in your organization got promoted or received a bonus because they were willing to take a smart risk, rather than sitting back until it became obvious or completely safe to act.

When when the last time a Board fired a CEO for moving too slowly or for not doing enough experimenting?

Yes, there are plenty of ill-conceived ventures that should not have seen the light of day or should have been approached in a fundamentally different way.

But I’d wager there are far more projects that should have been started, but weren’t because individuals or organizations were too afraid of failure.

Without the risk of failure there is no innovation. And without innovation you and your company are likely toast.

In reality failure needs more friends, more cousins, more Godfathers, more parents.

It’s time to adopt failure, not shun it.

 

 

Neiman Marcus & Target: A glorious failure

“Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”

-  Samuel Beckett

If you pay attention to this sort of thing, you know that several months back Neiman Marcus and Target made a big splash when they announced a partnership to jointly market a limited collection of fashion items for the holidays. This announcement was followed by a lot of PR hoopla and a high-profile television and social media advertising campaign.

And guess what? It was a bust.

The product offering failed to generate the sales frenzy that past designer collaborations from Tar-zhay have, and the merchandise has been marked down 50 – 70%. The media are now out with their post-mortem bashings, many taking the “I knew it was a bad idea all along” route.

Having previously led strategy and corporate marketing at Neiman Marcus for several years, I’ve gotten plenty of questions about my take on the strategy and its execution (NOTE: full disclosure, I remain a Neiman’s investor). Frankly, I think much of the criticism misses the mark entirely.

Clearly, a lot of the execution was messed up. Prices were generally too high, designer brands were extended too broadly and some of the product was just plain goofy: a $50 Rag & Bone boys’ sweater? That was never a good idea.

Big picture, however, the concept was fundamentally good for both Target and Neiman’s. Target is well-known for enhancing its fashion cred with such partnerships; so for them, this was a no-brainer. If they made any money on it, all the better. But the real value is in brand enhancement.

For Neiman Marcus, the strategic value may be less obvious but, in essence, their foray into “mass-tige” is no different from Karl Lagerfeld or Jimmy Choo doing their special offerings at H&M. The goal is to generate buzz and expose their brands to a demographic that they need to cultivate for the long-term. Forging a longer-term and/or more broad partnership would be dumb. But experiments, such as what was tried here, can be shrewd moves indeed.

Which brings me to my last point. What gratifies me the most is that Neiman’s actually tried something bold and, arguably, counter-intuitive. Neiman Marcus’ last CEO–and my former boss–Burt Tansky was a brilliant merchant and remains a luxury and fashion industry icon–and rightly so. But he was hardly a risk-taker and fundamentally not wired to say ‘yes’ to strategic innovation. Kudos to Karen Katz and her team for being willing to push the envelope.

It’s so very easy to label something a failure after the fact and to castigate management for its ineptitude. The far easier path for leaders of course is to never try. You rarely get criticized for the things you didn’t do.

It’s a terrible strategy to eliminate the possibility of failure. Great companies and great leaders are not characterized by an absence of failure.

Without trying, there is no growth. Without failure, there is no learning. The key is to fail better.

So was the Neiman Marcus and Target partnership a failure? In the immediate-term, definitely. But the overall grade from where I sit is “Incomplete.”

If the lesson Neiman Marcus takes away from this project–and it is a project, not a strategy–is to pull back on innovation, to stop experimenting, than it will be a huge waste of time and resources. If it strengthens their resolve, if they apply their learning to improve the process of innovation, than it will be the most glorious of failures.

The gift of prophecy

“It’s the end of the world as we know it…and I feel fine.”

- REM

So today is the day that, according to many, the Mayan calendar predicts the world will end. Of course these guys didn’t even see the Spanish coming, so I’m not sure why we give their forecasting skills much credibility.

Our world is filled with people offering up bold, highly confident predictions. Re-elect Obama and we will sink into a morass of Socialist despair. Outlaw guns and only outlaws will have guns. Cut government spending and we will sink into a recession. Or cut that same spending and we will finally trim our deficit and enter a brave new world of prosperity.

As Nate Silver reminds us, we must learn to distinguish a true signal from a universe of noisy data and input.

And we must consider the source.

And remember that the past is less and less a good indicator of the future.

I’ve had some success persuading people to buy into my (or my team’s) view of the future. And my batting average isn’t bad.

But when I, or anyone else, starts believing that they have the gift of prophecy, well that is a dangerous thing indeed.

The shopper genome project

No doubt you’ve heard of The Human Genome Project–the effort to decode our species by identifying and mapping all of our genes. Ultimately it’s an effort to better understand what makes us tick, from both a functional and physical standpoint.

As a business or brand leader you have a similar challenge when it comes to decoding your current and potential consumers’ attitudes, needs and behaviors.

In a world of vast and growing choices, the pressure is only increasing to develop deep, actionable insight into your customer base.

In a world where most segments are growing slowly, your only chance for out-sized growth is to gain market share. And that requires understanding which levers to pull that are compelling enough to win new clients or grow share of wallet with existing ones.

In a world where most competitors are either engaged in a race to the bottom or stuck in tired old mass marketing techniques, you have the chance to win big by embracing a “treat different customers differently” strategy. But you need to understand how to meaningfully segment your customer base and exactly which value propositions to deliver to which segments. And you need to get into action.

In a world where smart devices are growing like crazy and (finally!) offer the promise of the right offer to the right customer at the right time, you had better be able to follow consumers as they channel hop and to deliver permission-based, highly relevant and personalized communications.

More than a decade ago Don Peppers and Martha Rodgers opined that the only true lasting competitive advantage is to know more about your customers than the competition–and to be willing to act on that insight.

That’s never been more true than right now.

 

Pick a lane

Funny how often it seems like keeping your options open seems like the least risky strategy.

The job seeker crafts an “I can do anything” resume designed to make her appealing to the widest range of potential employers.

A brand launches a low price guarantee, while still claiming to embrace a strategy focused on service and differentiation.

A retail CEO attempting a bold turn-around talks about making his brand more distinctive and relevant while also striving to become “everybody’s favorite store.”

Sometime you can have your cake and eat it too. Spiritually, the middle way can be the path to enlightenment. Black and white thinking can often get you into trouble.

But in a world of overwhelming data, endless choices and a sea of sameness, you had better choose. And choose wisely.

It’s far more risky to engage in the race to the bottom if you aren’t committed to being THE low-cost provider.

It’s far more risky to try to be a little of everything to everybody than something powerfully compelling and remarkably relevant to a tightly defined set of consumers.

We are all familiar with the driver who straddles the line, failing to commit to a lane.

But that’s just annoying.

For businesses, it’s death in the middle.

Pick a lane.

And then step on the gas.

 

 

 

Learning what you already know

Tonight I expect we will witness a pretty robust Presidential debate. Some prospective voters are likely to get a lot out of it.

But most won’t.

For the die-hard Republicans, just about everything that gets said will confirm that our President is a typical tax and spend liberal. He’s obviously an inept leader who, by the way, was probably born in Kenya. For them, Romney is clearly the sort of leader who will get tough on spending and restore America to its rightful place as THE leader of the free world.

For the dyed-in-the-wool Democrats, Romney will once again show that all he cares about is rich people. He’s the sort of guy who will say anything to get elected, and besides, his numbers simply don’t add up when it comes to his deficit reduction plan. President Obama, on the other hand, has gotten us back on the right track and he is the candidate who truly cares about ALL Americans.

My particular example is about politics, but my point is broader.

We watch Fox News or MSNBC because it supports the world view we already hold.

We read books to reinforce our preconceived notions.

We spend our time at work polishing a skill we already have.

We learn what we already know.

Don’t get me wrong; there is often benefit in practicing our craft and in deepening our knowledge. But if you are anything like me, you often invest your time at the margin in a fruitless quest for perfection or engaged in activity that is mostly about assuaging the ego or staying safely in your comfort zone.

I wonder what you would get if you spend a bit less time learning what you already know and just a bit more time challenging your conventional wisdom.

I wonder what the world might get.

 

 

 

Trying stuff

One of my favorite brand slogans is Columbia Sportswear’s: “Trying stuff since 1938.”  It’s not only a corporate philosophy, but it also speaks to the ethos of many of their customers.

I also love what J. Crew CEO Mickey Drexler recently said about his brand’s nascent re-entry into the Chinese market: “I don’t consider this a huge risk at all and if, in fact, we didn’t succeed in Hong Kong, life goes on. We’ll figure out alternatives.”

What’s embedded in both statements is complete acceptance that growth does not spring from the relentless pursuit of perfection. They realize that you don’t require a complete and crystal clear view of all the next moves before you make your first. Innovation is an iterative process and, more often than not, he who hesitates is toast.

But for many of us–and our organizations–a brutally honest slogan might go something like this:

“Too afraid to try anything because I might look foolish if I’m wrong.”

“Waiting to see what the competition does before I do anything.”

“I never miss an opportunity to miss an opportunity.”

“Treading water since grad school.”

“Enjoying the action from the sidelines.”

Compared to those maybe “Trying stuff since yesterday” doesn’t sound so bad?

 

Knowing what “yes” looks like

Creating something meaningfully new, taking a risk, putting yourself out there to face the critics, skeptics and trolls is never easy. As Seth reminds us, our lizard brains are wired to keep us stuck.

But what if you sit across the table from the person who has walked through their fear and is now asking your permission to innovate? What if you are faced with the decision to green-light a risky project that is being advocated by a passionate team?

Having been the chief strategy and growth officer at two Fortune 500 companies I’ve led dozens of projects, big and small, and across a spectrum of boldness, designed to spur innovation and accelerate growth. More often than not, when our team has gone to the CEO or the Board asking for support to move ahead, we were told “no.” Sometimes we understood why we were declined and walked away with clear feedback and a road-map to move forward. Other times the feedback could be summed up by either “this is not the right time” or “we’ll know a great idea when we see it.”

Just because you have risen to a senior leadership position doesn’t necessarily mean it’s any easier to walk through your fear. Frankly it’s a hell of a lot easier to say “no” to a new venture than to risk being wrong or looking foolish.

As leaders we can do better than defaulting to the least risky position, to letting our lizard brain win. If we are going to say “no” we need to know what a “yes” looks like. And we need to be able to communicate that to those we lead.

And when they come back having addressed our concerns and resolved our doubts, than we owe them that “yes.”

 

JC Penney swings for the fences (Part 1)

New CEO Ron Johnson’s first big move to re-invent JC Penney was to eliminate their intensely promotional high/low pricing strategy. The key elements are:

• Moving most products to “fair and square” every day pricing
• Establishing month-long themed value pricing for certain key items
• Simplifying and creating regular break dates for permanent markdowns.

To break-through the sea of sameness that envelops the slow growth moderate department stores space, Penney’s clearly needs to take bold action. And any student of retail knows that other needed changes to product assortments, in-store experience and digital strategy will take multiple years to fully implement. So what should we make of this “radical” new pricing initiative?

First, anyone who knows retail knows how foolish a high/low pricing strategy seems. The amount of money spent advertising events in weekly circulars and various broadcast media is enormous (and increasingly ineffective). The payroll and collateral costs of constantly changing in-store signing is a major line item. And “forcing” consumers to wait for a sale or have a coupon or get your store credit card to obtain the best price is seemingly a big customer dissatisfier.

So going to “fair and square” everyday pricing would seem to be a win for the consumer and a major improvement to any retailer’s earnings. Why not emulate Nordstrom and get both great Net Promoter scores and have an advertising to sales ratio that is the envy of the competition? It’s a slam dunk, right?

Well, not so fast Skippy.

First of all, unlike Nordstrom, every promotional retailer like Penney’s (and Sears and Macy’s and Bed, Bath & Beyond, etc.) has taught their customers–over many, many years–that their “regular” price is a sucker price. Reversing this perception will not happen quickly, no matter how creative your new ad campaign is and no matter how much money you throw at it in the first few months.

Second, every retailer has a customer segment that is intensely deal driven. This group refuses to buy unless they are convinced they have gotten the best possible price. And they believe they can ferret that out. They love the thrill of the hunt. Buying something without some special incentive is an anathema to them.

History shows–whether you are Sears, Macy’s or Saks–that when you pull back on promotions this segment’s business drops like a rock. If they are a tiny fraction (or an unprofitable piece) of your sales, it’s not a big issue. If, as I suspect is the case at JCP, they are a meaningful profit contributor, the short-term hit is significant and they will be hard to win back.

Third, like it or not, promotional marketing creates urgency to buy. Major events with limited time offers drive traffic. In-store messages that shout a great deal increase conversion. Over time hopefully Penney’s can teach their consumers that every day is a good day to check out their store and that there is no reason to shop around for a better deal. In the immediate term sales will suffer.

Lastly, and perhaps most importantly, the math on everyday pricing is tough. While it is true that most consumers buy at the lowest promotional price, it is also true that there are plenty of customers who pay full price (or receive a lesser discount). To achieve the same gross margin percentage would mean setting an everyday “fair and square” price that is above the lowest historical promotional price. But by doing that, you will be uncompetitive with your direct competitors.

An informal price check I did yesterday (at the mall closest to Penney’s corporate headquarters) revealed that Penney’s price on several key national brands was several dollars higher than Macy’s and Sears. For consumers that pay attention to such things, this will undermine JCP’s pricing integrity and cost them business. This also creates an opportunity for Penney’s competitors to attack them directly on the one major initial plank of their new strategy.

The other alternative is to set prices to be consistently competitive day in and day out. Doing so will drive Penney’s gross margin rates down, which will require a very significant increase in sales just to maintain the gross margin dollar productivity at last year’s levels–which weren’t at all impressive.

Penney’s has acknowledged that they expect to take a near-term sales hit as they implement their new pricing strategy. And everyone recognizes that pricing is just one piece of a multi-faceted, multi-year transformation.

My fear is that this pricing change is much more of a swing for the fences move then the new management team realizes and that the first few innings of this new game will be far more brutal than expected.

While unconfirmed, initial reports are that sales having taken a bigger hit than management anticipated, which could lead to inventory issues and a huge loss of momentum for the new leadership at Penney’s.

I applaud Ron Johnson’s willingness to go big and bold. However, I expect his credibility and tenacity will soon be tested.

***********

In Part 2 I explore what else Penney’s new strategy must entail.

 

The show must go on.

“The show doesn’t go on because it’s ready. It goes on because it’s 11:30.”

- SNL Producer Lorne Michaels (as quoted in “BossyPants”)

It’s tempting to think that with enough analysis, with more task force meetings, with a few extra iterations of that PowerPoint deck, with just… a… bit…more…time, success will be assured.

But that’s an illusion.

Success is an evolution, not an event.

Perfection is over-rated.

1.0 is better than 0.0.

What would you pull the trigger on if you knew the curtain was rising–if the proverbial train was leaving the station–whether you were ready or not?

It’s hard to step on the stage, into the harsh light and be willing to encounter the judgement of an audience.

It’s harder still to miss your chance.