January 2018

“The essence of strategy is choosing what not to do.” Michael Porter

When I was a kid in the 1970s there was only one place to go for good fast-food fish and chips. And you didn’t have to go far to find it. Arthur Treacher’s Fish & Chips had more than 820 restaurants across the country in the mid-70s. They were one of the great fast-food success stories and offered a tasty alternative to the burger chains.

I was thinking about them the other day. I realized I hadn’t seen one of their restaurants in years. I wondered what ever happened to them. Thanks to Google, I found an interesting article which described their fate.

The article explains a perfect storm of events that hit Arthur Treacher’s in the late 1970s: There was intense competition with other fast-food chains and the price of cod had skyrocketed due to a fishing dispute between Iceland and Great Britain.

The company was sold to Mrs. Paul’s Seafood in 1979 and that’s when the problems magnified. In order to stay competitive, executives at Mrs. Paul’s Seafood decided to replace cod with a less expensive fish, pollock. This one decision marked the beginning of the end of the company.

To be fair, many types of fish are used to make fish and chips, but the most popular fish used in traditional British fish and chips is cod. More than 60% of all fish and chip meals sold in the UK feature cod. Americans like their cod as well and they didn’t like the change at Arthur Treacher’s.

Throughout the 1980s, Arthur Treacher’s lost many loyal customers, went through several owners and quickly lost ground to competitors. Before long, hundreds of locations were shut down. Today, there are just seven stores, with only four operating exclusively as Arthur Treacher’s.

“However beautiful the strategy, you should occasionally look at the results” Winston Churchill

How do you take a successful restaurant chain from more than 820 locations to only 7 in less than a decade? You choose the wrong strategy.

When businesses are faced with challenges, like Arthur Treacher’s in the late 70s, they need to act quickly. Management often looks for a swift and simple solution. On paper, the idea of replacing cod with pollock seemed to make sense. The company would save money and no one would know the difference. The problem was that customers did know and they didn’t like the change.

What made Arthur Treacher’s special was the authentic taste of cod in their fish and chips. Removing that took away the company’s uniqueness. Implementing the cost-cutting strategy actually stripped away their competitive advantage.

In 1985, Harvard Business School professor Michael Porter wrote the popular business book, Competitive Advantage: Creating and Sustaining Superior Performance. There, Porter outlined the three primary ways companies can achieve a sustainable advantage. They are cost leadership, differentiation and focus. Cost leadership means you provide reasonable value at a lower price. Differentiation means you deliver better benefits than anyone else. Focus means you understand and service your target market better than anyone else.

Executives at Mrs. Paul’s Seafood chose cost leadership as a strategy when they should have considered differentiation or focus. They had a business model that was already different and special. They had a loyal customer base that liked their product. There was room in the market for an alternative to the burger chains. They chose the wrong strategy which led to the rapid decline of this once popular brand.

As a business leader, you will be faced with many similar challenges. When competitors are lowering prices, your first reaction may be to match their actions to try and take over the cost leadership position. But that isn’t the only answer.

Porter shows us there are other ways to compete and maintain a competitive advantage as well. Like Arthur Treacher’s, our businesses are unique and special. We can leverage that uniqueness to deliver better benefits than anyone else with a differentiation strategy or we can service our target customers better than anyone else with a focus strategy. In the end, it is important to look at all possible solutions to choose the right strategy. Choosing the wrong strategy can have deadly consequences.

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What if you could know what your employees were thinking? What if you could see the company through their eyes? How would your leadership efforts change if you knew what truly motivated your team?

Believe it or not, understanding your team and how to lead them effectively is easier than you think. The problem is most leaders don’t spend enough time with employees, really listening to them.

“Leaders must recognize that the key to success and growth is getting employees to tell you what’s really going on.” Vineet Nayar

Listening to employees is a critical skill to master in order to become a more insightful and effective leader. This seems simple but it’s often overlooked. Most leaders spend their day in a bubble. They find themselves surrounded by people who see the company as they do. Getting out of the office and spending time listening to employees will help you break out of that bubble and give you a different perspective.

Here are four ways that listening to employees improves your skills as a leader:

You create relationships. When you spend time listening to employees, you get to know them and they get to know you. In the process, you build mutual respect. You build a relationship. As you learn more about their passions and challenges, you understand how to lead them more effectively. They will also get to know you better and the reasons behind your actions.

“One of the most sincere forms of respect is actually listening to what another has to say.” Bryant H. McGill

You face reality. Listening to employees gives you a unique perspective. You discover how things are really going. Employees can be brutally honest, which is why many leaders avoid this activity. If you are going to lead effectively, you need to confront reality and address the challenges your team is facing.

“Great listeners are often terrific at uncovering and putting in place strategies and plans that have a big impact.” Richard Branson

You uncover common themes. As you listen to employees, you discover common themes. These are small pieces of narrative that tell a bigger story. You might find that employees are having a problem with one of your supervisors or a new piece of software. You may uncover a common customer complaint or lingering production bottleneck. Spending time with employees gives you access to the raw data that is often filtered out in a traditional command-and-control structure.

“Most of the successful people I’ve known are the ones who do more listening than talking.” Bernard Baruch

You build a team. When leaders and employees spend time together, they become more aware that they are on the same team. It’s easy to blame someone you don’t know, or understand, for your problems. Listening to employees can help eliminate the “us and them” mindset. When we do that, we can better focus our attention on customers, the competition and getting better as a company.

Some of the best leadership insights are found in the breakroom, not the boardroom. If you find yourself surrounded by people who see the company exactly as you do, you probably need to break out of your bubble and go spend time listening to employees. This simple act will help you create critical relationships, confront reality, uncover common concerns and build a stronger team.

Month: January 2018

Death of a Business: The Problem with Choosing the Wrong Strategy

Get out of your Bubble: Why the Secret to Great Leadership Insight is found in the Breakroom, not the Boardroom