We all acknowledge the changes in the economy and that individuals and organizations have made significant cost reductions and dramatically lowered growth expectations. However, this has ignored some of the fundamental structural realities and requirements:
• We have ignored the proliferation of unnecessary products, the consumer’s perception that the stuff is overpriced and a return to basics.
• The major marketing strategy seems to be cutting prices and worshipping Walmart rather than restructuring companies to be more efficient, pursuing new distribution strategies and developing newer and better products like Dyson’s vacuum cleaners or i-Phones.
There are some apparent solutions to these issues and they are not dependant on just waiting for the economy to recover.
• Organizations need to completely rethink their strategies, position, structures and operating efforts. Retailers like Macy’s, Best Buy and Bed Bath and Beyond have failed to capitalize on their positions created by the loss of a chief competitor.
• Our greatest needs are for innovation, entrepreneurship, new structures and excitement about our organizations. Change or passion requires energy, personal commitment, ignoring barriers and confidence of individuals that exemplify passion.
• Many operations experts have long promoted that 80 percent of a company’s sales come from 20 percent of its products. This tough economy offers a great opportunity to reduce the proliferation of products that just aren’t producing.
• Organizations are still studying new trends rather than embracing them. The Internet, aging demographics, women, Google, social networks, etc., are realities and not trends.
My recent experience indicates that we can have success dealing with these issues. In early June we bought a small Internet slipcover company called Stretch and Cover and have started a number of strategies to promote growth and increase efficiency:
• We reduced our SKUs by over 60 percent, eliminating products that accounted for only 10 percent of sales.
• We will develop and have five new major product offerings ready for consumer purchase in four months.
• Most important is that we have developed a real virtual organization. We have hired incredibly expert, part-time talent in every function that is developing exciting new programs.
Granted we are small, but companies need to think how to have size stop being a barrier rather than an excuse. In summary, we need to simply accept the new realities rather than continue to challenge them.
Bert Shlensky, a veteran of the home furnishings industry, is president of Stretch and Cover. He can be reached at email@example.com.