No cogs allowed

manufacturing-assembly-line-in-china

As more and more companies struggle to find a path towards improved business and engagement with customers, one of the main things they have to consider is getting rid of a cogged system. You know what a cogged system is. It’s when someone does “this” and by nature protects “that”. It’s what almost all people were taught to be a part of. Get a good education, do good work, keep your job. Leaders embrace it. Employees protect it. The problem is it completely stunts the ability to find newness, innovation, synergy, and honestly a motivated team.

An un-cogged system, on the other hand, encourages people to try new ideas, find new talent, make a bunch of mistakes, learn before the competition, and drive people to think and create instead of process and do. It shouldn’t be possible that the only way to make something happen for a brand or business is to get approval from the CEO. Cogs by nature exist to prevent disruption or newness. They are the system of an assembly line. That’s why a clock or time piece remains accurate or other machinery crunches out predictable output. You need new ideas. People want to be artists. Why have cooks when you can assemble chefs?

If you want to innovate and become the future, get rid of your cogged system.

Zig when you think you should zag

P13_0173_a4

Photo: autoweek.com

I remember years ago when I bought my first real sports car. This was a car that could literally give you neck pain from its acceleration. It was a rocket on wheels, and honestly a lot more car than I knew how to control. Going zero to sixty was a thrill, but the most fun was it’s handling on turns. Unfortunately this was before a lot of electronics made car handling much more manageable for the average driver and the enthusiast like me alike. If you didn’t know how to drive this car, it would get out from under you easily–like an untamed horse.

Here’s what I quickly learned–what you think you should do is sometimes the opposite of what you ought to do. The natural tendency of most drivers going fast into a turn is to apply the brakes just before and into the turn. Don’t do that! I learned that the hard way by finding myself spinning around in circles. I thought it was the car, but it turns out it was me. Braking into a sharp curve from a high rate of speed changes the dynamics of the car. By doing what is normal, braking, you essentially shift the weight of the car forward on the front wheels, take weight off the rear wheels, and voila the back of the car becomes the front of the car–sometime several times in succession! And while this can be a lot of fun, it’s also scary as hell.

What I quickly learned is that you actually do the opposite. When going into a sharp turn, set your speed into the turn so you can ACCELERATE through the turn; brake before, accelerate through. Who the hell would think to do that? Perhaps a physicists or engineer, but certainly not me. Yet by accelerating through the turn, you improve the dynamics of the car by applying downforce on the car’s center of gravity, which lets you zip through the turn with great force and control. You zig when you think you ought to zag.

My description of physics in the above example is elementary at best. I also don’t recommend most people going out and trying this aggressively. There’s a fine line between accelerating too much and too little. If done correctly however, you are faster and safer–unless of course you want to crawl through the turn; in which case there’s no sense having a spiffy little sports car. It takes time and practice to become comfortable zigging when you think you ought to be zagging.

The point is that you need to apply this to many real-life circumstances. When you’re in a hurry, slow down. When you’re angry, breath. It works! Zigging instead of zagging is likewise critical for brands and businesses. If sales are bad, don’t take markdowns. If competition is aggressive, think smaller. When everyone is zigging, zag. And if everyone is zagging, zig!

Brands equal the experience they give

o5e7pr5pfbyxg97otpb8

Brands have a habit of focusing too much on product and not enough on experience. I see this happening a lot with fashion. Fashion brands used to create collections of products and then advertise and market around a lifestyle. That doesn’t work anymore. Consumers want experiences. They want something unique and special that adds value to their life.

Restaurants have learned this. Go to Dig Inn or Sweetgreens and you are part of an experience. A great experience lets you become part of a community. It allows you to interact, make your own choices, be a part of the process, and feel good telling friends and colleagues about your what you’ve done. If it weren’t an experience with good product, people wouldn’t stand in line for half their lunch break to get some quality food.

Brands need to come to the realization that truthfully no one cares about their products. Consumers care about the experience. How do you make it interesting for your consumers to connect with you? How do you make them feel engaged with what you are doing, thinking, creating, and producing? Are they part of the process? Would they stand in line for your products because they are excited to tell friends and colleagues about what they’ve gained from you?

Brands that are focused on product and not creating an experience for their consumers are racing to the bottom with price. Let’s be crystal clear–discounts and promotions are not an experience, and consumers aren’t transactions. Brands have to move beyond creating a lifestyle to creating an experience. Your brand is only as good as the experience you give your fans.

Buzz Aldrin Poses next To The U.S. flag On Moon
060280 01: Astronaut Edwin “Buzz” Aldrin poses next to the U.S. flag July 20, 1969 on the moon during the Apollo 11 mission. (Photo by NASA/Liaison)

The word “innovative” has been completely overused the past past decade or more. Everyone says they’re innovative. Every business and brand, every retailer, startup, consultancy, agency, author, blogger, musician and so on tells you they’re innovative. Truth is most of us aren’t innovative. We’re just iterative–we do similar thing, but with a twist!

The good new is we can become more innovative with the right headset.

Peter Thiel, the genius investor who was an original investor in Facebook, as well as a co-founder of Paypal, wrote a compelling book called Zero to One. Anyone interested in building and leading a company in this digital age should read it. The gist of Zero to One is that Peter looks to invest in companies and ideas that have the potential to go from nothing to something–something that didn’t exist before to something that becomes meaningful tomorrow. Uber is zero to one. Tesla is zero to one. AirBnB is zero to one. Instagram is zero to one. You get the point…

The other side of one is a sea of iteration. Lots of “ones” work to become two’s, three’s and four’s. Companies and brands that make more of the same thing, extend its reach to other markets, develop synergistic branches of the same thing, or buy other companies that do the same stuff. ITERATION IS NOT INNOVATION. If you’re a brand, retailer, startup, consultancy or whatever and you want to keep your head above water, you have to INNOVATE.

Ask yourself this question, what are you and/or your business working on today to solve for tomorrow that was like nothing you were remotely comfortable doing a year ago? Something I’ve learned as an entrepreneur and investor in companies like PreeLine is this, place your bets in the ideas that are crazy enough to be called nuts and/or teams who are smart and gritty enough to make stuff happen. That’s likely to lead to a zero to one innovation.

If you’re the leader of a brand or retailer, business, team or think tank, you need to pull your resources together right now and start to innovate. Here’s the thing; if you’re not looking for moonshots, you’re not innovating. If people aren’t telling you you’re crazy, you’re not thinking BIG enough. Challenge your teams to think big and generate ideas that are nuts. See what happens, put it to action, and don’t squelch the momentum. Ignite ideas with execution.

Don’t turn “great” into “meh”.

Let’s be clear–iteration is not innovation. By the time you iterate, someone is going to innovate you out of business.

When The Unnatural Becomes Natural

high-jump-athletes-womenwebSometimes doing something unnatural generates remarkable results. I appreciate the story of Dick Fosbury. He’s the guy that invented the “Fosbury Flop”. Up until the mid 1960’s, doing a feet-first, scissor-kick over the high-bar was the way everyone jumped the Olympic high bar. Seems natural enough. You see a high bar, run up to it, hop into the air, do a fancy little scissor kick, and ta-da you’ve jumped over it.

Dick Fosbury did something completely different and it was at least partly because he had bad feet from years of jumping feet first over the high bar. Dick decided it might be better to jump over the bar backwards. It certainly was easier on his feet. Why not take a couple steps, jump, turn your body, and drive through the jump head first and backwards? Coaches and friends told him to stop, but guess what? He got a gold medal and set an Olympic record in 1968. What’s more, the “Fosbury Flop” is how literally all high-jumpers have jumped ever since. Hindsight being 20/20, we now realize through science that the “Fosbury Flop” is highly efficient use of body dynamics and gravity. The feet-first approach, on the other hand, was as efficient as dragging a whale over dry pavement. What was initially very unnatural, is highly effective and now normal.

Brands and retailers have to start doing some unnatural things if they want to become relevant again. Maybe we’ll create a “PreeLine Pounce” at our company. The fact is sales are sputtering, consumers are disappearing, and margins are eroding. The natural tendency is to create more products, buy more inventory, use deeper discounts, and wreak more havoc. In other words–jump over an increasingly higher bar feet-first. Do any brands or retailers recognize how bad their feet hurt from all the pushing and promoting they do? The industry is practically hobbling, yet it continues to jump feet first with a cute little scissor kick, face forward—and SPLAT!

The unnatural thing to do would be to focus on fewer products, buy less inventory, and stop using deep discounts to sell your products. It can be done. And it would have a tremendously positive impact on your business, customers, employees, shareholders, and factories, as well as our environment. The truth is we have access to unprecedented insight with modern technologies. Consumers are social and mobile. Instead of allocating inventory to a store, as is the natural way to plan inventory, we should be planning products to the consumer. Let’s shoot for n-of-1. Know the customer, not the average.

Test, Engage, Ignite.

I am committed to inverting the process known as B2C. It needs to be done. It’s what the team at PreeLine does day in, day out because it a tremendous solve for a very big problem.

When you have the chance, do something unnatural. It’s how we grow. It’s how we learn. And it’s often how we advance ourselves.

As a closing note, be sure to tweet some good names and thoughts for versions of the “PreeLine Pounce” to me @dmlamer

IT’S NOT THE PRODUCT, IT’S THE THINKING

Einstein-FrameIt’s been another challenging year for retailers, department stores, and brands. Mall traffic was down 10.7% this holiday season according to RetailNext. That decrease is on top of the high-single digit decrease last year, and mid-single digits decrease the year before that. But hey, digital is up. And guess what–all told, sales this holiday season were ok.

Macy’s reported comp store sales down almost 5% November and December and attributed 80% of that decrease to unseasonable weather conditions. According to a WSJ article, Macy’s CEO Terry Lundgren said “although consumer spending seemed healthy, people were buying items that department stores don’t sell, such as cars, electronic gadgets and home improvement projects.”

So fewer people are going to malls and department stores, and more consumers are buying items not available in those stores. Is this a matter of people not wanting those products or is it more a matter of brands not adapting to the new consumer?

A lot of effort is being done to try to figure out how to better utilize digital tools and fuse them with brick-and-mortar businesses. Brands are trying out Snapchat, jumping all over Instagram, and ultimately trying every promotion possible to get people to buy their goods.

So in this regard, it appears new ideas are being attempted. But aren’t these all really just iterations of the same? Aren’t they all just repackaged push-marketing strategies designed to sell consumers products already bought, made, and delivered into thousands of stores across the country?

The truth is the industry still produces products with long lead-times and then pushes those products to consumers. No one has yet come to the realization that maybe the problem isn’t the creativity, marketing, and product, but rather the massive amounts of inventory being bought and produced with virtually no involvement from the customer before hand. Maybe it’s not a problem of WHAT, but rather of problem of HOW MUCH to WHOM.

In 2010 the global apparel industry produced over 150 billion garments. Should I say that again? More than 150 BILLION GARMENTS ARE PRODUCED EACH YEAR, and it’s growing. The question we need to ask is FOR WHOM ARE THESE 150 BILLION GARMENTS BEING MADE?

There are only around 7 billion people on this planet now, which is more than 20 garments for every man, woman and child on Earth. Seems like a lot to me! But lets also keep in mind that roughly two-thirds of the population isn’t a consuming class of people. Fewer than 2.5 billion people do virtually all the consumption on this planet. There are 1 billion people still not able to get good drinking water. Let’s face it, most people don’t have the means, wants, or needs to consume anywhere near the amount you and I do.

So who’s buying 150 billion garments each year? The answer surely is not all the people on planet earth. And whether one wants to argue about the impact of this excess production in terms of what goes into landfills, how much is lost in profits, or how this destroys brands, it’s a clear indicator of how saturated the industry is with inventory. It’s not the product, it’s the thinking.

I think most brands and retailers would find similarly startling results if they were to look at UNITS PRODUCED COMPARED TO UNITS BOUGHT BY CUSTOMERS at viable margin.

Retailers, department store, fashion and specialty store businesses have to pivot their thinking. It’s what we’re doing at PreeLine by building a platform that engages modern consumers so we can learn what they want, when they want it, and how to get it to them efficiently. We think the solution to building a brand isn’t more products, higher inventory levels, and deeper discounts. It’s not more stores, more advertising, and more messaging. Those efforts have been done over and over again. And to Einstein’s point on insanity, the results aren’t even staying the same—they’re getting worse. We’re past being insane, doing these things over and over again is delusional at best and criminal at worst.

Product differentiation at this point is negligible. Literally all the products at stores like Macy’s are iterations of what is, was, or has been. Marketing through new social media channels is a given–you’re supposed to do that. The pivot is how you approach managing the millions or billions of dollars in inventory.