Business Strategy: Yes, you can make a pig fly
Companies that try to serve multiple masters with one model get into trouble
Years ago, I got a call from a customer who was mad as hell. She was from Dearborn, Michigan, and frequented a store we had there. At the time, I was in charge of 350 Kinko’s stores. (For you youngsters who weren’t around before FedEx bought Kinko’s and eventually killed the name, we had about 1,200 stores that provided copies, binding, etc.) Though there were numerous management layers between me and the stores, I knew many of them well. This one had an extremely smart manager with a great-looking profit and loss statement. (I rarely forgot an attractive P&L!) This store was right across the street from Ford World Headquarters in an amazing location.
The woman said the store’s service had gone to hell, which surprised me because the manager and his boss were sticklers on service. She said jobs that used to take minutes now took hours to complete. I apologized and told her I’d look into it. On my next trip to Michigan, I spent some time at this store. There were boxes of documents everywhere, very efficient workers and the great buzz of a well-run operation. However, when I started looking at the P&L details, I realized traffic counts were down but revenue was up substantially.
This manager used his entrepreneurial spirit to crack the code at Ford and was producing lots of big jobs for them, but this posed a problem. Unfortunately, he pushed aside our target customer, a bit like McDonald’s trying to cook steaks on the hamburger grill. Our stores were designed more for retail, rather than commercial, work — more McDonald’s than Ruth’s Chris Steak House. He made lots of money (we had a “fraction of the action” compensation program that paid our managers a percentage of the profit) and jury-rigged some production methods to get these large jobs done in a retail environment.
Unfortunately, his business model was inconsistent with our strategy. He temporarily made a pig fly!
A great debate ensued within the company about how to pursue “corporate” opportunities while continuing to serve our core customer. (Back then, we called them “SOHOs”— small office, home office.) That’s another story. …
I read recently that to compete with Internet retailers, Macy’s declared its stores “distribution centers” and will attempt to fill and ship Internet orders from the stores. My guess is that this pig won’t fly for long. Channel-harmony issues and inappropriate systems will likely overwhelm this effort to leverage existing assets. Competing with Zappos or Amazon with a brick-and-mortar business model is a tough row to hoe.
Companies that try to serve multiple masters with one model get into trouble. When you ask a compensation program, a store design, a hiring profile, a management structure, etc., to expand to serve two types of customers, misfortune ensues.
You can strap wings on a pig and throw it out of an airplane, but you’ll just get a very upset pig.
Todd Ordal is President of Applied Strategy®. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He is a former CEO and has led teams as large as 7,000. Todd is the author of, Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing, 2016). Connect with Todd on LinkedIn, Twitter, call 303-527-0417 or email email@example.com.