Business Excellence Archives - Page 3 of 7

Breaking Away from Big Brands

07/05/201808/06/2021Jon Rennie

I recently had an experience staying in a $68 a night hotel that was remarkable. I was helping my son move and I just need a place to crash for the night. The cheapest hotel in the area was a brand I had never heard of but, it had decent reviews, so I booked it. I didn’t expect much but what I experienced was amazing. The staff was friendly. The lobby was open and airy. The room was clean and spacious. The $68 rate even included a hot breakfast. I was blown away by the value.

This experience made me think about how brands affect our buying decisions. When I travel on business, I mostly stay in big brand hotels. I try to find the best rates but I also want a hotel that is going to be clean and safe. I don’t want to risk having a bad night in a terrible hotel. There is comfort in choosing a big brand but this method isn’t foolproof. Like most business travelers, I can tell you countless stories of bad hotels with rude staffs, dirty rooms, and terrible conditions. It turns out that the name on the outside of the hotel doesn’t always guarantee the quality inside.

So, why do we tend to choose known brands over lesser known brands in our buying decisions? I think there are three main reasons:

Comfort and speed. We’re busy. When making purchasing decisions, we don’t want to spend a lot of time looking at all the various options and information available to us. We recall past purchases and recent advertisements to identify the best choice. Big brands are comfortable because they are known to us. We have heard of them or have had past experiences with them. For speed, we choose the known over the unknown.

Identification. Brands affect our identity. Often times, we choose brands that we want to be associated with. Driving a Ford pickup, wearing Levi jeans, or owning a Gucci purse all say something about us. We will also choose brands that are accepted in our peer groups. A serious weightlifter, for example, wouldn’t show up at the gym in Polo sneakers. We choose brands for identification.

Risk. Often times the risk of a poor purchasing decision outweighs the potential benefits. We choose the big brand because we think it is a safer choice. When you see the McDonald’s sign when pulling off the highway looking for a meal, you know what to expect. You might skip a restaurant called Big Jim’s Burger Joint because you have no idea what it will be like. What if the food is bad or you get sick? Even though Big Jim probably makes a better burger than McDonald’s, the risk outweighs the potential benefits.

The problem with choosing big brands is that we miss out on the opportunity to explore something that is unknown. We miss out on an experience that is either simply amazing or so bad that you will be telling stories to your friends for years. Choosing big brands is often the safe choice but it’s also the most boring and unremarkable one. And who wants to live a boring and unremarkable life?

If you want to break free of the comfort of big brands but are afraid, here three things you can do to help make the shift:

Listen to what others saying. With Yelp, Trip Advisor, Amazon, and most websites, you can explore what others are saying about unknown or lesser known brands you are considering. Listening to others can help reduce the anxiety of your decision. There is comfort in knowing others have gone before you.

Use time as an advantage. The higher the price of a buying decision, the more risk is associated with it. However, these decisions typically take longer, allowing more time to research the best solution. Take the time to do your homework. Look for all the alternatives both known and lesser known. Evaluate them all. Your best solution may not be the big brand. If a decision is for a lower priced service or product, take a chance on the lesser known brand since the risk is low. You may be amazed at your experience.

Look beyond price. Often times, lesser known brands offer more features and benefits than the big brands. I was once asked by a potential customer why he should buy from my company versus one of my largest competitors. My answer was simple, we ship in 24 hours. The big brands all had lead times of 6-8 weeks. The customer switched because speed was important to him.

The small business advantage. Many times, the lesser known brand is a small business working hard to earn your money. Instead of spending time in corporate meetings, small business leaders spend time with customers learning what they like and dislike. They are constantly adjusting their business model to please customers and attract more business. To them, it is personal. Show them some love and give them your business. You may become a lifelong customer.

Breaking away from big brands means departing your comfort zone and choosing an unpredictable outcome. Most likely the experience will be positive especially if you have the time to research the best solution. Regardless, it gives you the chance to explore something that is unknown. So, step away from the boring and predictable and enjoy the experience!

“Two roads diverged in a wood, and I took the one less traveled by, And that has made all the difference.” Robert Frost

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

01/04/201808/06/2021Jon Rennie

“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.

If you liked this post, you’ll love my new book, All in the Same Boat: Lead Your Organization Like a Nuclear Submariner.

You can find it HERE or on Amazon.

12 Rules for Success that Turned a Small Family Business into a Global Brand

11/02/201708/06/2021Jon Rennie

Bill Marriott, former CEO of Marriott International, learned business and leadership by observing his father, J. Willard Marriott. The elder Marriott was one of the most successful startup founders in U.S. history. He turned a small family root beer shop into a chain of hotels in the 1950s.

Bill Marriott joined the young company in 1956 and, nine years later in 1964, his father asked him to become president of the company. On the eve of being announced as the new president, at only 32 years old, Bill sat down and wrote down twelve rules for success.

Using the principles, Bill Marriott led the growth of Marriott International to become a $14 billion company, operating 30 brands, 5,700 properties, and more than 200,000 employees around the world.

Bill Marriott’s 12 rules for success, which he crafted in 1964, are still as relevant as ever today.

Challenge your team to do better and do it often.
Take good care of your associates, and they’ll take good care of your customers, and they’ll come back.
Celebrate your peoples’ success, not your own.
Know what you’re good at and keep improving.
Do it and do it now. Err on the side of taking action.
Communicate by listening to your customers, associates and competitors.
See and be seen. Get out of your office, walk the talk, make yourself visible and accessible.
Success is always in the details.
It’s more important to hire people with the right qualities than with specific experience.
Customer needs may vary, but their bias for quality never does.
Always hire people who are smarter than you are.
View every problem as an opportunity to grow.

Read more about Bill Marriott’s leadership style and the incredible growth of Marriott International in Without Reservations: How a Family Root Beer Stand Grew into a Global Hotel Company.

Learn more in my new book, I have the Watch: Becoming a Leader Worth Following.