In today’s fast-moving markets, only the quickest will flourish and agile principles can play a critical role in enabling retailers to thrive.
The Digital Revolution is transforming the retail industry at an unprecedented rate and customer experience is shaping up to be one of the key battlegrounds. The race to keep up both with customer expectations and also with competitors has created a surge of critical change programmes. And to complicate things further, new ideas will be added to this list quicker than existing projects will be completed.
The likes of Amazon have built agile organizations that enable learning, adapting and moving fast to deliver new products and features that customers want. For established retailers, this is not easy to replicate.
The truth is that many established retailers are built for a different era. They are built for operational efficiency with high levels of bureaucracy and hierarchy which helps to control costs through very structured, and slow, decision making processes. They are not built for agility and embracing continuous change because they didn’t need to be. This poses a challenge in today’s world.
A very relevant analogy for how to deal with this is in General Stanley McChrystal’s book, “Team of Teams: New Rules of Engagement for a Complex World”. The former Army General was leading the US Army against al-Qaeda in Afghanistan when he realised that the current military command and control structure was simply not working.
This was because the enemy was not built like a traditional army. It was made up of small splinter cells spread throughout the country that carried out spontaneous attacks with little central planning required. On the other hand, the US army was slow to make decisions because of the chain of command. Also, different functions (e.g. intelligence, special forces etc.) worked in siloes and didn’t share information with each other. This led to a lack of agility in responding to an enemy that could mobilise and act quickly and spontaneously.
To combat this, he implemented a number of unprecedented ideas, including decentralised decision making, by empowering his subordinates on dangerous missions and creating daily meetings to share (previously highly classified) intelligence across all functions. This is credited with changing the course of the war in the US’s favor.
What does this mean for Retail? The expectations of Generation Z customers are growing fast, digital technologies are improving exponentially and systems, processes and data are increasingly interconnected. New opportunities and threats will continuously pop up. This also means that the lifespan of each change is shorter and retailers need to sense, adapt and respond quicker than ever before.
How can they do this?
Retailers need to adopt principles of agile into their culture and organization structure. This means the following:
- Decentralising decision making, where possible, by empowering managers to take ownership of decisions themselves without the need for senior level sign off. After all, those who are in the detail are often the best placed to make the decision anyway
- Learn from the culture of lean start-ups to fail fast and focus on short iterations of work and continuous feedback on projects to learn and adapt the solution
- Encourage collaboration across business functions to share information in a mutually beneficial way. This is especially important for data on customer opinions and behaviors to “keep the finger on the pulse”
- Reward employees who take initiative in solving challenging problems rather than those who simply follow established processes
- Set up a governance model that continuously reprioritises which ideas and potential projects are allocated people, time and money based on the value to the customer
It is a huge challenge for established retailers to keep pace with the expectations of customers and embrace digital technologies. However, the real challenge isn’t how to keep up with today. It is how do we create an organization that is prepared to embrace the challenges of tomorrow.
by Callum Jack