Question #1: Is it possible for a manager to manage sales in a retail store?

Through out the retail industry, including manufacturers and distributors, the sales number is often the number one priority. Indeed, in many companies sales numbers are so far above any other measurement that managers live and breathe by whether sales are up, or down. If sales numbers are so important they must be manageable, right? Let’s find out.

A number of years ago two highly experienced retail store managers quit their jobs and promising careers and purchased two stores and began a career of teamwork as owner-partners, rather than employees of a large chain. For four years the partners did everything imaginable to build sales volume in both stores. During the first two years the partners frequently told friends and family, “Sales are up.” In fact, about 18 months into the venture one of the partners said, “Can you believe it, our sales are up 22 percent over last year!” Without doubt these two owner-partners had achieved the American dream. They owned their own business and were controlling their own destiny. Clearly, everyone who knew the owners was envious, wishing they had as much courage to do the same. After all, isn’t this how other successful retail business began?

The first indication of trouble was when the partners tried to sell one of their stores. When that didn’t happen, they abruptly closed it over a weekend. Their explanation was that the store had always had problems and by closing it they could focus their attention and capital resources on the one remaining store. With the problem store closed, friends and family once again heard reports of, “Sales are up.” But within a few months the second store was also closed and the owner-partners declared personal and business bankruptcy. Literally the partners lost almost everything they owned. They escaped the failed venture with one taking a job as a clerk for Home Depot, and the other selling used cars.

What happened? If sales were consistently up, how could the business not be profitable? The answer is that in retail there is no direct connection between sales and profit. Unless gross and expenses are fixed, sales and profit become independent variables. It is possible for sales to go up, for example, while profit goes down; and profit can go up, while sales go down. The reason is that there are no guarantees in retail. Other factors such as gross margin, labor, overhead, and expenses have greater impact on profit than sales alone. That’s what happened and crushed the American dream for two enterprising, former, store managers. Now do you know the answer to the question, “Can sales be managed?” Let’s use a bit of strategic thinking and drill a little deeper toward the answer.

Question #2: Is there anything a manager can do directly to sales that will make the number change? Is it only possible to impact sales by influencing other factors?

Actually, sales are a product of two factors. That means nothing can be done directly to sales to make it change. To change sales a manager must manage something else, not sales itself. Therefore, to focus primarily or excessively on an unmanageable number, at the expense of the things that can change it, could lead to failure. This explains the failure of the two storeowners.

Question #3: What are the only two factors that determine sales in a retail store? Can these two factors be managed?

It’s true that many things contribute to retail sales; things like, margin, signing, suggestive selling, pricing, displays, merchandising, stocking, store location, advertising, product availability, and many more. But all of these things can be rolled up into two factors. Do you know what they are? The accompanying illustration is the key. All of the things listed above, and many more contribute to two factors: (1) Number of Guests, and (2) Sale Per Guest. The number of guests and the amount of each transaction determines sales. Did you answer correctly?

Question #4: Can the two factors that contribute to sales, Number of Guests and Sale Per Guest, be managed?

As with the sales number, what can a manager do directly to Number of Guests or Sale Per Guest to make them change? The answer is, not much. Once again, it isn’t possible to manage these numbers either, because they are the products of other things. Although they are excellent measurements of the health of a retail store (or company), they are technically unmanageable. To focus primarily or extensively on them at the expense of the basic things that really drive sales could be a mistake.

Question #5: So what can a retail manager manage?

The answer to this question is everything that contributes, or rolls into, Number of Guests and Sale Per Guest. The basic elements are the things that can be managed, not the products of these elements. That means the most effective place to manage sales is not with sales itself, but rather in all of the fundamental elements that begin the process. These are the things that are manageable, not the product number such as sales. When a retail employee is told, “Your sales are down, you better get them up,” the employee can only make the change at the basic element level. And if the employee doesn’t have a good understanding of the process, it will be very difficult to make the change.

The little boy took every advantage of Information please. ‘I hit my finger with the hammer and it hurts.’ Information please came to the rescue… ‘Can you open the icebox?’ she asked. He replied he could.  ’Then chip off a little bit of ice and hold it to your finger,’ said the voice.

After that, he called ‘Information Please’ for everything. He asked for help with his geography, and she told him where Philadelphia was. She helped him with his math. She told him his pet chipmunk that he had caught in the park just the day before, would eat fruit and nuts. This little boy gathered information for any question he desired.

Where do we go to gather our intelligence? Thinking we are getting the most accurate information possible, we often use the World Wide Web as our personal Information Please. Unfortunately, the computer only answers what it has been told. The information we receive is at times not only misleading but inaccurate as well. So what do we do then?

To gather the correct information needed to make an educated and informed decision, a little strategic thinking may be involved. You might follow five ways to gather intelligence as taught by CMOE in its strategy programs:

• Do your homework and research your target thoroughly (get knowledge hungry)

• Investigate and understand the environment you are working in, moving into, or encountering

• Decode and anticipate future trends, recognize patterns, and “connect the dots” (cause and effect links)

• Seek out accurate and objective information about your capabilities and readiness level

• Establish signals, harbingers, and mechanisms to track progress and alert you to opportunities and dangers

Sometimes it takes more than just clicking a key on the computer or picking up the phone to gather information. Regardless of whether we use ‘Information Please’ or the Internet to gather our intelligence to make a decision, we must make sure the information is accurate.

One day I heard an expert talking about exercise, the benefits of physical activity and the regret of doing nothing at all. He brought up the point that in many decisions we make in life, we can either discipline ourselves to do what we know we need to, or regret later doing nothing. One thing I know, “discipline weighs ounces”, “regret weight pounds”! I had to make a change.

I immediately set some goals for myself, and after three months I had lost 20 pounds. I was feeling great. Better yet, it was noticeable to others. One friend asked, “What are you doing? You have lost a lot of weight and are looking good. What diet are you on?” My reply was, “I am on the GOAL diet.” He looked at me confused and so I explained to him that I set goals for myself and then worked to achieve my goals.

By the look on his face, I think he was expecting a different answer. He went on to tell me that he had a goal of losing 25 pounds in 6 months, but he’s had that goal for 2 years. His biggest frustration was, “Why Can’t I Achieve My Goals?” I thought about the question for a while and here are three things you should ask yourself if you are struggling to achieve goals.

1. Are your goals written down and reviewed daily? This is vital to your success in achieving goals. The old saying is, “Goals not written are just wishes.” Reviewing your goals on a daily basis will keep you focused and keep the Goal in mind every day.
2. Is your Main Goal divided into “Mini-Goals”? My friend’s goal was to lose 25 pounds in 6 months. That was it. He didn’t have monthly, weekly, daily goals. Now that doesn’t mean divide the 25 pounds by 6 months to get your monthly goal and then divide that by 4 for your weekly goal. That would be the same goal. You need goals for specific actions that will help you achieve your Main Goal. In this example, a good weekly goal would be, to exercise 4 times this week. A good daily goal would be, to not have any sweets today. All these “Mini-Goals” keep you on track in reaching your Main Goal.
3. Did you share your goal with someone else? There is something to be said about accountability. If we are only accountable to ourselves, it is too easy to justify a sub-par effort. Just knowing that someone is going to ask how we are doing, gives us more motivation to succeed.

Setting goals are important in all aspects of our lives. Used correctly, goals help to keep us on track and motivated to work hard and achieve what is most important in our lives. Used incorrectly, goals can hinder both our short-term and long-term success. As in the example with my friend, he had the goal for 2 years. Because he was not able to achieve that goal, he felt inadequate and unable to ever make the change. Therefore, he stopped trying. It is important to set our goals to be realistic and achievable (with some good effort). Then ask ourselves those 3 questions to make sure we are on the path to successful goal setting. If you Prefer Rules: 1. Write it down 2. Divide into Mini Goals 3. Create accountability.

While the title of this book intrigued me (only four hours of work a week), I just didn’t get around to reading the best seller until a couple of weeks ago. It’s a fast read and well articulated. I really liked Mr. Ferriss’ first concept that “Time is Money.” For me this view is right on. Too often, we are so busy trying to make a better income, we forget just how much it really costs us. Three main elements in the book caught my attention. I feel they are well worth considering if not incorporating into your life: Elimination, Selective Ignorance, and Outsourcing.

Elimination
As we age, we naturally reach a point where we begin an elimination process in our lives. We not only cut back on material possessions, we also begin to eliminate unfulfilling activities. Mr. Ferris is simply moving this process from the autumn years to the spring years of life.

Selective Ignorance
One person cannot know everything about everything, and yet we all know people who will not, maybe cannot, say, “I don’t know.” Selective Ignorance, according to Ferriss, is the process of deliberately ignoring topics that may not be relevant or will take too much time to explore. I agree that it is important to limit our focus to what we can handle realistically, but it may not always be to our best interest in doing only those things we enjoy. Think about the first time you were on a bicycle; can you honestly say you enjoyed falling off that two wheeled contraption? Yet, today you may be an avid bicyclist.

Outsourcing
Asking others to do jobs that are outside our expertise is a no-brainer. However, I have two main concerns about giving our tasks we consider time wasters, to others. First, outsourcing will not guarantee that what you get will be what you wanted or needed. Simply put, no one sees the world like you do. Second, by giving your time wasters to someone else, are you adding more hours to their work week. You must ask yourself, “What’s the cost? Is your time more valuable than theirs?” Rather than outsourcing time wasters, let’s go back to the concept of Elimination. Get rid of them and make everyone more efficient.

Summary
What concerns me most about Mr. Ferriss’ book is the impression he gives that you should simply stretch the rules of the game to fit your needs so that you can win the prize. Example, early in the book he talks about using loop holes in rules to win an international sports competition. He drastically reduced his water weight to weigh in at a lower weight so later he would outweigh his opponent. And because he didn’t have the skills, he used another loop hole in the rules to win by pushing his opponents off the mat. So, okay, he won the prize. Strategy and tactics aside, what about ethics! What about to the personal satisfaction in acquiring the skill to compete? While winning is important, the pride in developing the skill is often more satisfying.

I’ve come to the conclusion, that for most of us, time management is not the problem. There is little doubt that each of us couldn’t get better in some aspect of time management. I’ve taught time management classes for more than 20 years. And while far from perfect, time management is not my biggest challenge either. So what is the biggest challenge to getting more done and creating more value where it matters most? I believe the answer is a lack of well thought out and clearly defined “strategic targets” which will have a significant impact on your future. Let me explain.

A “strategic target” represents an innovative, strategic idea or initiative you want to pursue. It describes where you want to be or what you want to accomplish at some point in the future. These targets could be personal or professional; they could be linked to your family life or relationships, your career or some aspect of your current job. A target could be as simple as “What are the expected outcomes of a meeting you’re facilitating this afternoon?”, or as complex as “What will the organization look like after the merger?”

Without specific targets to focus our limited time and energy, we spend a lot of time spinning our wheels on things of little strategic value, things that keep us running in frantic, meaningless circles. We’re very busy trying to do everything for everyone, and in the process, getting very little done that really matters or adds value to our lives or the lives of others. It is ironic that very few of us would get in our cars and drive frantically without a clear destination in mind. And yet, most of us have a tendency to go through our projects, jobs, careers and lives in just such a fashion… no clear destination or target in mind. No wonder we find ourselves so tired and so stressed out and yet no farther down our desired path.

Time management is not the problem… a lack of strategic targets is. What targets, if obtained, would make a difference in your life? Where are you going today? Do you know?

I recalled his first car accident (from 18 months ago) and how afterwards, we had created a step by step process to help him in the future. In addition to creating a process and with the hopes of being as strategic as possible, we discussed plausible outcomes that follow an accident and how he could handle each one. For me, I had thought this was an excellent opportunity to think ahead and plan for the future, as the odds of a car accident repeating itself in his lifetime were not in our favor. I made sure my husband had updated insurance cards in the car, an “accident packet” with phone numbers and our written process for what to do. In my mind, my husband had all he needed to manage such a situation effectively.
Following his second accident I took away three lessons for what now lies ahead:

1. You can never be too prepared. The path to become an effective strategic thinker does not end when the clock strikes 5 and you go home from work. For example, I could have talked to my husband a bit more about car insurance when we renewed the policy.
2. Think and re-think possible and plausible scenarios. Time, attitude, and experience changes and thinking strategically by anticipating this ever changing world allows us to be more prepared.
3. Plan. Execute. Adapt. Repeat. Thinking strategically means having a plan in place and executing the plan as needed. Change is inevitable and you must be proactive to the change, adapting, not reacting to it. Repeating the process is how we grow as strategic thinkers as there will always be a next time.

It was clear to me that day that thinking strategically is not a 9-5 job. Strategic Thinking is an ongoing responsibility that extends beyond work and into your day to day life. As you implement these few points you will be better prepared for the next time you hear the words, “Don’t be mad…” Wrecks happen. Deadlines happen. Obstacles happen. When we learn to think strategically, it makes us better prepared to control the situation, rather than the situation controlling us.

Strategic Management
Let’s look at Strategic Management in general terms. Wikipedia explains, “Strategy is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives. It is the process of specifying the organization’s mission, vision and objectives, developing policies and plans. Strategic management seeks to coordinate and integrate the activities of the various functional areas of a business in order to achieve long-term organizational objectives.”

Applied Strategic Thinking
Applied Strategic Thinking is a way of scanning your environment, finding ways to perform more efficiently, being more innovative, and reacting to outside challenges and opportunities with more confidence because you have already considered variables.

The Difference
Notice that the main difference between these definitions is the timing. Where strategic management is a long-term plan for the future, Applied Strategic Thinking considers the future from the next few seconds to however long the concept will be relevant. In other words, you can consider the best route around an accident or plan for your retirement and everything in between including your influence on the future of your organization.

The second difference is in the number of members. Strategic management usually takes a team to determine the direction of an organization. Strategic thinking is something everyone, as individuals, can do. So a strategic thinking janitor may discover that changing a product will be less expensive, more effective, or perhaps more environment friendly than the current product being purchased. Strategic thinking means an individual looks at his/her environment, evaluates it, and then asks, “What would happen if . . .?”

From my perspective, this is good news because these are leadership competencies that can be developed through sustained training and development initiatives such as coaching, teamwork, strategic thinking, change management, and fundamental leadership qualities.  Despite the economic constraints facing many organizations, my hope is that more businesses begin to recognize that a greater number of leaders can be successful and contribute to a company’s bottom line performance when they have well-developed, and sustained interpersonal and strategic skills.

But wait just a minute, is success and productivity only measured by doing more and more and more? In our world today, this often seems to be the case. We have so many tools to help us get more done in a shorter time frame and it feels good to check things off the proverbial “to-do” list. However, just getting things done quickly isn’t always better. In fact, it is quite possible that we get so caught up in getting things done, that we might be spending our time on things that really don’t deserve our time and attention! When this happens, it means we are getting caught in the activity trap. Our focus is on checking off the “to-do” items, but we become nearsighted to the long-term horizon. Now you must ask yourself the question, “If I lose sight of the horizon, then what am I really doing today?” “If I can’t see the future, then are the things that I am checking off on my daily “to-do” list helping? Or are they hurting future opportunities?”

Question: Why do people get caught up in the magnetic pull of completing tasks?

Answer: Because it feels like forward movement which gives you a sense of accomplishment and can create pride and self-worth. While this is good, I want to suggest that we make sure our daily contributions are going toward the ultimate focus, the big picture in our lives. So when we finally reach that pinnacle and defining moment, we know we were on the right track. Then we truly reap the fruit of our labors. Imagine working thirty, forty, maybe even fifty years down a path that when it comes to an end, it does not align with your ultimate end objective. Wouldn’t that be frustrating and disappointing?

In order to make sure we have our daily contributions on track, it is important to do a little strategic thinking. That’s right. Just do a little more creative and critical thinking about what to do each day and how it will impact tomorrow. As an added benefit of forward thinking, you’ll be surprised at what items can fall off your daily “to-do” list. I don’t think any of us need more to do, our days are full enough as it is. What we need to do is make sure that what is on our plate belongs on our plate! Gaining control of our daily efforts creates a greater sense of accomplishment in the short and long term, as well as provides a sense of freedom. Freedom to do more with your time and freedom to spend your time focused on the right things. Everyday strategy is a concept that I believe can bring an added-value to you individually and to your organization.