AI in Retail: Beyond The Hype and Into Reality for Store Operations.
The Top 10 AI use cases that Retail Operators at every level told us would transform their daily work. AI for Retail Operations is...
In the first of a series of blogs on the Great Retail Restructuring of 2020, we examined how retailers were responding to the pandemic with the usual steps of Re-organizing, Restructuring and Refocusing. With a little reframing however, these protective steps could actually provide a simple strategic bridge into becoming a more agile and resilient organization.
We’re examining Denning’s 3 laws of Agile thinking – the law of the team, the law of the network and the law of the customer – and exploring in a series of blogs how these can be used to turn the crisis into a strategic opportunity for forward-thinking retailers. Today we’re looking at how the law of the team plays out in re-organizing, focusing on the critical role that management plays.
One of the things we’ve seen in the Great Retail Restructuring of 2020 is a large scale cut in the middle management level as companies have been re-organising.
Between 10-25% of roles have been removed at most companies, made hastily in response to the financial and operational environment. They’ve mostly not been strategic decisions, but tactical moves.
Whilst these might have been an unpleasant necessity for the times, they also offer an opportunity to reevaluate. Does management matter? What is the point of management? Such hard cuts reawaken the common disillusionment cycle of these roles.
In 2002, Google experimented with reducing the number of managers, only to replace them after a few months given everyone started running around like headless chickens. Whilst their role and purpose might be ever-evolving one thing is constant: management is essential for running productive and prosperous enterprises.
Oliver Banks, retail consultant and host of the Retail Transformation podcast explains: “If you reflect on your own experiences of past managers, you’ll be able to see the fine balance between what makes a great manager or not. With this hindsight, you’ll also be able to see simple mistakes that are the downfall of less successful managers and how they made you feel. Dealing with people often results in the successful manager becoming more of an artist.”
“But at the very same time as navigating this, they also need to serve as performance agents for the business to drive improvements. This brings in the science elements of management.”
“If you reflect on your own experiences of past managers, you’ll be able to see the fine balance between what makes a great manager or not."
So, managers have a duty to read business performance and outcomes through the lens of their past experience, combining it with steer from leaders above them to help drive business goals. Friction and pressure can build up for managers when there is a disconnect or even conflict between these two demands. As businesses have grown and central teams become more distant from changing demands of the day to day, managers can feel like they have to compromise between what’s best for the store and customer, and what’s best for the business as a whole.
Is that an inevitable compromise large retailers have to make? Or are there ways that managers can meet and surpass both the top-down and bottom-up expectations of senior leaders and customers? Can they focus on the business hitting its goals, whilst also providing an environment for teams and people to thrive?
Both managers and companies are seeing disillusion for three main reasons:
Management structures have remained relatively unchanged for a century. The 1:10 ratio of manager: reportee was initially set up in a world where a primary purpose was the coordination of information and activities.
The rise of digital technologies has now made information transfer seamless. It’s shown that companies are less like a machine with inputs leading to outputs, and more an interconnected web of activities and relationships. Most management has still yet to adapt to this structural shift.
A rough calculation would suggest the cost of management overhead in the US is >$100bn+ per year given its endless layers. With pressure from rising costs and more sales shifting online, margins are being squeezed and traditional business structures are proving slow, inflexible, inefficient, and expensive.
We’ve explored this in the past, but the main activities in management have become a mixture of exhausting travel, carrying out store audits and inspections, and reams of data analysis and admin. At times it makes management feel like a set of robotic tasks: “If this, then that.”
If you have store managers and associates that are only following orders and lack the autonomy or empowerment to play an active part in the business, you’ll quickly find your teams become disillusioned and unmotivated. At the same time, you’ll find compliance, care, and opportunities dwindle. At this point, task management implementations tend to appear, which give HQ a ‘good enough’ sense of control over daily decision making and execution.
I’m sure you know the ROI of the latest investment that your company made. But what is the ROI on your store leadership? We’ve asked almost 500 companies this question, and not a single one had the faintest idea.
It’s hard to place who are the good managers. It’s often measured by just looking at top-line LFL revenue growth of whatever is under that person’s remit. But this can end up giving praise unfairly, as Jeff Halverson, formerly of VP Retail Ulta Beauty, explains:
“When you took out factors that were outside of a manager's control, e.g. new openings, we realized that all the managers we had been celebrating and promoting based on their regions' LFL growth had actually been middling performers, and we’d been promoting the wrong people.”
So, can adopting an agile management approach help remediate these issues? We think that agile’s law of the small team can help point us in the right direction, but it requires us to ask some fundamental questions of management.
The customer doesn’t always have to be the end customer and in management’s case, we don’t think it is. For management, the primary customer is the business, which in turn is there for its customer. This might seem like a trivial point, but it matters with agile. You must know who your stakeholders are and who you have to deliver value to.
To avoid thinking about management as an unsustainable, bureaucratic overhead, management needs to be something businesses would ‘buy’, so you must consider what user experience managers and are delivering to the business and where it drives value.
Almost everyone knows intuitively the qualities of the very best store managers: they find and innovate ways to improve revenues and profitability, they build a culture of great customer service, and they lead, engage, and grow great teams.
At its very heart, management is there to coach your teams towards success and not just set robotic directions. In the Google example where they fired and rehired their managers, they subsequently went through an exercise to discover what made a great manager. Coaching and communication were core activities.
You and your teams can have all of the best intentions in the world. But if you’re not able to turn those intentions into reality, it’s all worthless. Agile has shown us that cross-functional teams work best when you work on short cycles of relatively small tasks with continuous feedback loops.
It’s here that store leaders can play a vital role given their network and experience. Spanning departments like ops, merchandising, buyers, and finance, they can help to form horizontal connections across silos to bring together new teams and ideas. With management operating more like a network than a hierarchy, innovation happens easily, and progress towards business goals is rapid.
At Quorso, the data from our agile management platform shows that action plans for improving performance are most effective when each store manager is taking three at any one time, and the length of them are 3-5 weeks.
This is perhaps surprising and counter to the general annual or at minimum quarterly planning cycles of most companies. It’s also different from the long daily “to do” lists carried around in the back pockets of your management teams.
When the role of store management is to facilitate these sizable actions as well as provide coaching and continuous feedback to upskill the people around them, it helps to have the right tools. Key features will be those that:
With this mindset, management becomes the hub of continuous innovation and operational and people excellence in an organization. Agile businesses have a distinct competitive edge as they can operate leaner whilst iterating towards ever-better output. It’s no surprise that the term ‘agile’ is being so widely used to describe which companies have made it through the pandemic intact.
Such an approach is also transformational for the managers themselves. It’s a role that would make more work enjoyable and less of a chore. A role that would help upskill each of your team members to be able to deliver the best work for themselves and the company. And a role that will ultimately result in greater success by continually focusing more each day and more each week on your priorities, objectives, and strategy.