What about Bob?

I was 16. Life was great. It was time to get my first job. "Learning Express, that local toy store is hiring," my friend's mom told me. I decided to apply and was ecstatic when they hired me on the spot. Then life became a lot less tolerable. My example of misalignment occur ed within the walls of what some may have thought to be an innocent little toy store. Only four years later that toy store closed. I think I know what part of the reason was. We'll just call him Bob.

Bob was the owner of Learning Express. My first day on the job I was told exactly what the shared values of the company and specifically the little branch were. "We are a company that focuses on pleasing our customer. We want the customer to have a good in store experience and to feel the joy that comes from toys. We want the adults to feel the excitement of childhood as they look at these toys. Our culture is based on these goals. We want a fun, relaxed, family oriented culture, but also a culture focused on meeting goals and working hard. We want a workforce filled with self-motivated people who are driven to help the customer," Bob said to me. That sounded reasonable enough to me. I thought what could be more fun than working in a toy store. I love people so I thought focusing on people and making them happy would be easy enough. What I didn't realize was that nothing in the company aligned with these "shared values".

My first day as a cashier I realized that the structure of the company was completely unsupportive of the shared values. Being a company that supposedly allowed for an entrepreneurial and self-motivated spirit, the structure surprised me. We were given assignments based on how much in sales we did. If you didn't sale as much as another person you were on bathroom cleaning duty... or trash duty... or you had to stock the backroom. We were not paid by commission, but this unspoken culture caused a competitive, yet unhealthy culture in the store. Also, our store owner was incredibly degrading and insulting towards our team, and often times in front of the customers. He was incapable of leading our team because he didn't communicate with us. He never listened to our input and treated us as inferior. His style did not match the shared values of the company.

His friend was the store manager. She was completely unqualified and normally sat in the corner texting on her phone or in the back room talking to her boyfriend. The staffing was all wrong. There was also no clear strategy that was communicated to our team. It made it difficult to meet expectations and to be motivated to meet company goals.

Also, there were so many intricate procedures required for each transaction and being expected to complete them quickly made error very high. The systems the company had implemented were constraining and did not focus on the customer. Often times the misalignment of the company was so clear to a customer that they would leave without finishing their purchases. Maybe Bob wasn't the reason for the company's failure, but the misalignment that he certainly contributed to and didn't see a need to fix, most certainly was what closed the doors on that little toy store called Learning Express.

VRIO, Steve Jobs and Apple

I read an article in the New York Times about how Steve Jobs has changed the PC industry. It talks about how Steve Jobs changed the industry by infusing passion into a commodity. He created a new industry of sorts. The article speaks of how Steve Jobs focused, not only on technology advancements, but on design advancements. He was able to infuse passion by creating a new product, a product that was easy-to-use, functional, technologically advanced and aesthetically pleasing. Applying the VRIO Model of Sustained Competitive Advantage, we can better understand why Apple, under the management of Steve Jobs, has created such a sustainable company and such sustainable products, such as the IPod, in very unsustainable industry.

IPods, IPads, MacBooks, IPhones and other Apple products are all very desirable in the different industries they represent: cellphone, music, PC and other technology industries. Are Apple products Valuable? They are very valuable because they are something that consumers want. Specifically focusing on IPods, IPods are incredibly valuable to the consumer because they represent a social status and are incredibly functional. Are Apple products rare? Because they are so technically advanced and also have the unique design feature, Apple products are very rare within the different industries. IPods specifically are rare. They are unique. Are Apple products Costly to Imitate? Again, because of the unique design features they are difficult to imitate. Within the mobile music device industry, Apple has also included ITunes which no other mobile music device company has been able to match in ease of use, variety of music and popularity. Are Apple products exploited by the organization? I believe that Apple truly has figured out how to make full use of its products as well as to exploit the benefits offered by its products. IPods have been released and rereleased time and time again with new features, new designs and new markets.

In conclusion, it seems that Apple has been able to achieve sustained competitive advantage because it has created valuable, rare, hard to imitate and beneficial products that the company has been able to exploit well. Steve Jobs may be the mastermind behind Apple, and now that he has passed away a lot of shareholders and industry analyzers want to know if Apple will be able to continue with their competitive advantage. I believe that because of the culture of Apple, innovation is so highly prized, that there will always be new designs and new ideas within Apple that will help to achieve competitive advantage in a highly unstable and constantly changing industry.

Wanted: Level 5 Leaders, experience preferred

I recently read in the New York Times about Hewlett-Packard's decision in their new CEO, Meg Whitman. This blog reminded me a lot of the concept of a level 5 leader that Good to Great speaks of. Leo Apothecker, was recently outed by the board of directors at HP because he poorly communicated a very significant strategy change. In announcing the possibility of a spin-off PC company and also the decision of closing their line of portable mobile devices, many members of the board were left questioning whether or not the software, WebOS, which was recently purchased by HP, would continue to be used. Because of the significant misunderstanding, poor financial decisions were made which caused additional problems. It seems to me that the major problem was a lack of a top level leader. Inability to properly communicate strategies leaves a company blindsided without vision. A level 5 leader is someone who properly shares his vision with the entire company and is able to communicate, with faith and realism, potential problems and can receive and apply feedback from the company.

Mr. Apothecker lacked the ability to paint the picture of his vision for the HP board which left a lot of people questioning his ability to lead the company to success. As a result, Meg Whitman, former CEO of EBay during a large transition period, was appointed to lead the company as CEO. I believe that she has a lot more of the level 5 leadership qualities that will result in more strategic decisions within the company. She wants to retain some of the strategies that Mr. Apothecker implemented, strategies that the company was already working towards. She also seems to have put more of the right people on the bus, people that can help her better understand what strategies to pursue. She says that her biggest goal to save the American Icon that is HP. She wants to retain its image. She was chosen because she was a member of the board and came from within the company. This is a strategy that many company pursue, to hire from within. Other companies have an idea that bringing big CEOs from outside companies can help transform a good company to great. Jim Collins states otherwise. Saying that more often than not a good company can transform into a great company by being led by a person from within the company that is passionate about that company and cares more about the image of the company than their personal image. It seems to me that Ms. Whitman cares more about the image of HP as an American icon than she does about her personal image.

Its everywhere

The entire concept of strategy is very interesting to me. Standing out from competition and creating new niches and profit pools is fascinating. I have begun to realize that there is an definate art to making strategic choices that result in profitable increase. Today I went to the mall looking for a dress for a wedding I will be attending. I detest shopping for dresses! But while enduring this mundane shopping trip I realized something about profit pools, they exist everywhere. Whether or not companies are actually following the profit pool method to increase profitablity, companies are constantly searching out new ways to essentially make money. That is always the goal, to make more money. This was very evident on my recent mall visit. Walking into department store after department store I saw many examples of how these companies have tapped into profitable value chain activities. A department store is typically thought of as selling clothing. One would imagine that this is where profits emerge. But retail sales actually bring in only a small part of revenue. Many department stores offer credit cards. By offering credit cards many department stores make money off of merchandise margins and by offering credit cards the company builds a closer relationship to its customer. They often offer incentives for starting a line of credit, such as large discounts or money back. Through offering credit cards, customers usually spend more and the stores can charge large interest rates. As a result many department stores make a large portion of their profits through the accrued interest. Loans don't seem like they would be a normal value chain activity for a department store, but through developing this profit pool many department stores have become much more profitable.

Many department stores are struggling to compete with specialty and discount stores. Although department stores are looking for profit pools to tap into, they still struggle from the competition of discount and specialty stores. A difficulty for department stores is that they have lost a lot of market share to the specialty and discount retailers. Stores like Nordstrom and Bloomingdales have a strong brand loyalty and have been very profitable. This could be because they are very strong niche brands, while stores like Macys and JCPennys don't have as strong of a niche and are often found competing for market share with retailers like Kohls and Target. As competition increases department stores like Macys are looking to change their brand image. Macys has begun a new campaign to establish a more trendy and hip image in hopes of attracting younger customers and growing its market share.

As I searched for that perfect dress, which I did eventually find, I recognized the importance of strategic planning. Although I was focused more on finding a dress than on the store I shopped in, I realized how competitive the department store industry is. Because of the competition of other department stores and of specialty and discount retailers it is very important for these companies to create deep profit pools and to differentiate themselves from the competition by offering better brands, better customer service, a more enjoyable shopping experience, and better prices.