Articles

What It Takes To Shift The Paradigm

In mature, western retail markets customer’s shopping habits are already being met – and more than likely ingrained as habitual.

Every need and every want is in some way, shape or form being serviced. That really leaves most retail businesses little choice but to focus on careful refinement. Reducing the cost of doing business, improving efficiency and driving better controls of the key attributes that drive sales and margin.

Paradigm shifts – breakthroughs that fundamentally change markets for good – are rare.

This has a lot to do with the way businesses operate today. Most retail businesses are not only risk averse, they don’t tolerate risk at all. Contrary to the rhetoric of being best practice “learning organizations”, retailers severely restrict the capability of their organization to not only achieve breakthroughs, but to learn at all internally.

This has led to the evolution of an organisational model where learning is gained from studying other organizations and importing improvement methodology under a so-called “fast follower” approach. Following and importing are not only slow (the antithesis of the fast follower) but destined to ensure paradigm shifts are few and far between as competing retailers focus more on incremental gain over each other rather than leap change with their customers.

Paradigm shifts require several critical ingredients. An organisation that genuinely has a tolerance for acceptable risk. A business model focussed on internal learning and a clear understanding of what innovation means and how to embed it in business as usual.

Far from being about complexity, innovation revolves around solving customer’s genuine needs and wants, issues and problems in new and more efficient ways for them.

Observing customer behaviour, listening to their dialogue and embracing frontline staff feedback provides insight for creative business brains to ponder. Fully articulating customer’s needs, wants, issues and problems creates the brief. Creatively developing new ideas to meet them efficiently generates a long list of potential productivity gain. Working methodically through a risk analysis and prioritisation process short lists the actions that could result in the biggest “bang for buck”. Returns that justify taking qualified risks.

One of the greatest attributes of retail is that – at its heart – retail is a natural research framework. Any idea can be tested in a low risk way, either within a store or within a department, to examine scalability and return on investment (including time, energy, resources, cost and opportunity cost). Once returns have been proven, refinements made and rollout methodology determined, actions which at first appeared risky are revealed as being prudent.

Paradigm shifts involve risk because they involve trying things that have no track record. However, genuine learning organizations not only tolerate calculated risk, they thrive on it.