by As I look back over my 40+ years in the industry I am sharing some of the lessons I have learned from so many talented individuals. I am still fascinated by how basic marketing strategies are still effective in spite of all the change our industry has experienced.
“There are no good or bad industries to be in today. There are good and bad companies within all industries.” This statement was made by John Case, former president of La-Z-Boy Inc.’s Residential division and then La-Z-Boy Branded Products, about a decade ago at a Furniture/Today Leadership Conference.
Case left La-Z-Boy in 2004 to become President of Electrolux, a well established manufacturer of vacuum cleaners that was ailing financially. He wanted to see if the same business principles he had learned during his 25 years in the furniture industry could be applied to a completely unrelated industry. The answer was a resounding yes. Electrolux’s profits increased 10 fold in just 4 years. Case believes that any company can prosper and grow by following a simple plan that is executed with discipline and sticking by its goals.
Today, many companies still believe the only way to increase profits is by cutting costs. Their formula is: “revenue minus cutting costs = profits.” The result of this strategy is that you lower your standards for achieving success. You cannot cut your way to success. Case then shared what he considers to be the six most direct and effective ways for your company to have a game changing experience.
Ask yourself, “What is our product?” You may answer “furniture” or you may choose to list every product in your line. The correct approach is to break down the products you sell so that you can plan a competitive strategy for each category. Start with a blank piece of paper. Make a list of the product categories you offer (bedroom furniture, dining room, etc). Then make a list of the categories you do not offer. You will soon understand why this approach is valuable.
What markets do we serve? Where do we market our products? Typically we reply, “by the types of dealers we sell or by the type of consumer who buys our product.” Your sales team may describe your market by the distribution channels you sell to. Your marketing team will tell you that they are selling to certain consumer demographics. You cannot successfully develop a marketing strategy unless you have an understanding of both these segments. It is very important that you reach a common consensus with both sales and marketing.
Take a sheet of paper and make a grid composed of vertical columns crossed by horizontal lines to create boxes.. In each column across the top of the grid list each of the distribution channels you sell (for example, Independent retailers, discount stores, regional chain stores). Then, from top to bottom of the page, on the left margin, list each of the products you sell. You will then have created a separate box for each product you sell and the distribution channel you sell it to. Ask the following questions: What are our sales in each box? What is our profit margin in each box? Where do we need to spend our time and money? Many companies will discover that they have been cutting expenses across the board rather than in the “box” where sales and profits are not up to your expectations. Now, the most important question is what do you do to increase sales in the most profitable segments of your business?
What are your key capabilities? Once you have determined the product categories and types of customers that have the greatest profit potential, ask yourself, “What if this were our only business?” The answer is: Become an expert in that field. To accomplish this, Case recommended hiring outside experts. Don’t rely on your present personnel; they’ve already got enough to do. Don’t tell the people you hire what to do. Let them take a fresh look at your company. This is an opportunity to innovate new products or new ways to sell them.
Develop common goals for your company. Planning is simple. It’s the execution that is difficult. The bigger a company grows the harder it becomes to know what is going on at every level. The goals must be understood by every employee and everyone must be held accountable for carrying out the company goals. It is most important to stay focused. There is a German proverb that says, “The main thing is keeping the main thing the main thing.” Another proverb states, “If you chase two rabbits, both will escape.”
How do you achieve your goals once you have established them? Never tell people how to do things. Left to their own creativity they will almost always surprise you. Keep it simple. If you choose no more than three goals that everyone is dedicated to achieving you are more likely to succeed.
How will we work together and support one another to achieve our goals? Integrity is a key element. We have seen many business scandals this past decade. Dishonesty and corruption among both companies and individuals appear to be more commonplace than ever. Your customers are looking for companies they can trust. Former U.S. Sen. Alan Simpson once said, “If you have integrity nothing else matters. If you don’t have integrity nothing else matters.” A Japanese proverb states, “The reputation of a thousand years may be destroyed by the actions of one hour.”
If you want to change the direction your company is going, you can. There is more risk today in not doing anything. It’s all about making choices and then decisions. Do you want to do something dramatic? Lock yourself and your team in a room and don’t leave until you have come up with a common decision on your goals.
Joe Carroll, is former publisher of Furniture/Today. He was inducted into the American Home Furnishings Hall of Fame in 2009.
