Navigating at the Speed of Disruption

Shift Happens

?It’s hard to imagine an industry that has experienced more seismic shifts than retail.

As the last century ended, more than 95% of all shopping was done in-person, in a brick-and-mortar location. For the most part, product selection was limited by whatever a particular store decided to carry and happened to have in stock. Product information was largely gleaned from store associates or the brand’s mass advertising. Pricing was typically a take-it-or-leave-it proposition. And you could only shop during regular store hours. Unless the product you wanted was big and bulky--like a refrigerator or sofa--home delivery was rarely an option.

Then just about everything began to change. As e-commerce ascended, more and more products could be delivered cheaply and quickly to customers’ homes or offices. The scope and range of products that could be accessed online went from just books and CDs to a nearly endless aisle in nearly every category imaginable. Smart device adoption exploded, allowing customers to shop from wherever they happened to be, whenever the urge to shop struck them. Product access was no longer defined by store hours, but shifted to an anytime, anywhere, anyway world of abundance. Friction we once took for granted evaporated.

A World Turned Upside Down

It’s hard to succinctly describe what these revolutionary shifts have meant for the industry over the past twenty-five year or so, because they changed just about everything.

Massively valuable new business models (Amazon, Netflix, Warby Parker, et al) emerged gobbling up market share from once powerful brands. As smart-device adoption became ubiquitous, processing speeds increased, data costs plummeted, and companies could operate in the cloud, “amateur” buyers and sellers became easily and efficiently connected, creating entirely new markets (think Etsy, eBay, Poshmark, and Uber). Social media began to displace traditional media. Most shopping journeys started in a digital channel, even if the ultimate sale was made in a physical location. Once powerful customer magnets like regional malls and category killers (Toys R Us, Bed Bath & Beyond, and Circuit City) began to leak traffic to competitors that better met consumers’ needs. Retailers stuck in the mediocre middle engaged in massive store closings, filed for bankruptcy, or disappeared entirely.

What Did You Do During the Revolution?

If you’ve worked in retail over the past decade or more very little of what I’m describing is likely news to you. Many of us experienced it firsthand. Moreover, it’s not hard to find articles, white papers, and research studies that detail the radical changes and often harsh impact of digital disruption.

While the revolutionary waves of change often seem blindingly obvious, it’s also readily apparent that a distressingly large number of retailers have failed to keep pace. Which begs the question: “If the world has changed so much, why have so many changed so little?”

As just one high profile example, department stores have hemorrhaged market share for some two decades, while off-price retailers and category specialists, like Sephora and Ulta, have become far more valuable brands despite offering a more limited selection. As this slow-motion crisis unfolded Sears--once the world’s once most valuable retailer--sunk into oblivion, while household names like Macy’s, JC Penney, and Kohl’s made multiple leadership changes and launched various “transformation” initiatives that have yielded nothing of any consequence.

Defenders of the Status Quo

The reasons that so many once vibrant companies have failed to navigate the choppy seas of disruption are, of course, varied. Most of the time, however, we see leadership teams cling too tightly to a business model that has passed its expiration date. Leaders engage in an escalating commitment to a failing course of action instead of accepting that the very particular set of skills, experiences, and capabilities that once helped propel their organizations to great heights in the past will not serve them well in the future.

Leaders that got to the top of their organizations because of their expertise in merchandising and/or store operations may lack the digital chops to navigate a world that is very different than the one they grew up in. Experience gleaned in an analog dominant world, where the pace of change was typically slow and steady, may not only be irrelevant to today’s environment, it may also keep leaders from seeing what they need to let go off to create the capacity to do things very differently.

As Clayton Christensen first explored in his class book The Innovator’s Dilemma, breaking free of legacy thinking is often critical, but isn’t easy. For a modern take on this as it relates specifically to technology challenges, this white paper from SCAYLE Commerce Engine does a great job laying out the challenges and presenting a way forward.

The Speed of Disruption

In most parts of retail, the pace of change is only accelerating and is often more exponential than linear. While a given organization’s mileage may vary, we must be rigorously honest about our situation and often accept that if we don’t pick up the pace of our transformation efforts we are only falling further and further behind.

This may force us to take a wholly new approach to our business model and our go-to-market strategy. It will almost certainly lead us to pursue new technology platforms and applications.

In a world that is evolving very quickly, creating a culture of experimentation and building agility into our processes and practices increases our odds of being able to successfully surf the waves of disruption.

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For more on how to accelerate your transformation journey, check out my latest book Leaders Leap: Transforming Your Company at the Speed of Disruption.