Lee Wroe joins the cool kids club with this, which he reports has been, “… propagating in the local IS office recently.”
Entirely Irrelevant but I Just Can’t Stand It department: “High-paying jobs are available for people who learn how to run a key software program used by retail companies, several executives told Gov. Mark Dayton on Friday. And they’d like to see the state establish a training program.” (“IT execs tout Oracle software, ask state to help train workers,” Adam Belz, StarTribune, 10/26/2012).
Want to bet that next week the same characters will be complaining about too-high tax rates and the need to shrink government? And here’s a surprise: One of the companies making the pitch provides exactly this sort of training.
Speaking of retailers …
Not Entirely Irrelevant, but Close and I Can’t Stand It Either department: Just last summer Best Buy’s board of directors paid four of its top executives millions of dollars in “retention bonuses” (“Do retention bribes make sense?” Keep the Joint Running, 7/2/2012).
Here we are, less than four months later, and Hubert Joly, Best Buy’s new CEO, has provided an exit-door instruction manual (“Don’t let it hit you in the glutes on your way out of it”) to three of the four executives bribed by the board to stay.
I don’t know whether Joly made the decision for the right reasons, the wrong reasons, or no reasons at all. It does seem likely the executives whose names are all over Best Buy’s current mess aren’t likely to be the right ones to guide it out of its current mess.
I’m skeptical, though, that Joly is the right person to guide it, either. He comes out of the hospitality industry, and is emphasizing improved hospitality (read “customer service”) at Best Buy as its path to success. And like it or not, (I don’t), customer service seems to have fallen by the wayside as a business strategy.
Consider air travel. Do you choose the carrier that provides the best flying experience? Pay for the first-class upgrade? Or buy the cheapest ticket? Since industry deregulation began, ticket prices have fallen more than 40% according to the Air Transport Association, while the air travel experience has become 247% more unpleasant, according to everyone I know who travels a lot.
Want something more provably quantitative? Economy-class seats are 17″ to 18″ wide. The average male human is 21.7″ wide. Do the math.
More math: Women are 15″ wide on average, so the airlines are causing men to victimize women by overlapping into their seat space, whether we want to or not.
Next consider Pricegrabber.com. It’s quite successful; all it does is let you comparison shop so you can buy from the lowest-price provider that isn’t likely to swindle you.
But this is all business-to-consumer … B2C for we acronym-besotted denizens of the 21st century. How about B2B? My one-word answer: China.
Before the advent of the world wide web, business supply chain theory focused on forming stable, long-term, trust-based relationships with suppliers. Now it focuses on shopping for the low-cost provider.
Some high-service exceptions remain. The Apple Store, for example, is legendary for its superb customer support. Bose has a similar reputation; I experienced its reality personally some years back. Apple and Bose can afford great support through a simple expedient: They don’t have to discount, or at least, they don’t have to discount so much that their margins are squeezed.
Quite the opposite: Apple and Bose products are perceived to be unique. For plenty of consumers they have no direct competitors.
Where is this taking most companies? Into a world where price and convenience are what matter most. The customer experience, no matter how phenomenal, will be the tie-breaker, nothing more. It won’t support much in the way of higher prices or better margins.
Which loops us back to Best Buy and Hubert Joly. If price and convenience are what companies win on, shouldn’t Joly be focusing on making Best Buy the best buy again, like it used to be?
Here’s why this all matters to you as an IT leader: Like it or not, our primary job in most companies is going to continue to be what it has been for decades — helping to keep incremental costs as low as possible in every part of the business.
All that other stuff — business intelligence, improved decision-making, participation in strategy and so on? That still matters. It still matters a lot.
But it’s the surround, not the core, or at least, that’s how it is and will be everywhere IT supports businesses that win on price and convenience.
Sadly, that appears to be a growing fraction of the total.