That’s a loss. I’ve run workshops on product development governance with several organisations recently, and the results have been interesting. The same patterns emerge across a wide variety of people.

We’ve been looking at the decisions people make during the course of product and systems development, and at the way they allocate responsibility for those decisions. Organisations do this in all sorts of ways – some are top-down, some are bottom-up, some centralised, some devolved. But they all have common gaps in their governance.

The first of these is the “governance vacuum”. Every organisation has one somewhere. Everyone recognises that a decision, say about allocating specialist skills, is critical to success. And everyone thinks that responsibility lies with someone else.

Project managers think the programme director makes the decision. Directors think the project managers do it. Product managers see it as a technical problem. Technical people think it’s a product management concern.

So the decision is left in limbo. People point fingers. They complain about slow decision making. But nothing happens.

Governance standoffs, the opposite pattern, are also common. In this case, several groups all think they own the decision. These create a lot more fireworks, as people guard “their” patch, but they have the same end results:

• Delay – People don’t make decisions, either because they don’t think they own them, or because they’re too busy fighting about ownership.
• Last minute decisions – By the time the decision can no longer be ignored, it’s too late to undertake any sensible analysis. Decisions are now driven by gut feel and machismo. If you have a lot of crisis meetings, then there are probably vacuums and standoffs somewhere upstream in the process.
• Broken relationships – Governance fights, either to offload the decision rights you don’t want or to protect the ones you do, can get pretty savage. They tend to damage relationships. Eventually the fighting becomes entrenched – the decisions are forgotten, a mere pretext for battle.
• Bureaucracy - Organisations try to eliminate the above by resorting to rules. They define policies for every decision. This generally fails: in a dynamic environment, you can’t cover every possibility. Exceptions demand yet more rules, gumming up the works and creating the perfect hiding place for people who want to avoid accountability.

The solution to such problems is simple: talk about governance before you have to make the decision. The gaps become apparent pretty quickly. (My workshops surface a lot of issues within a half-day.) You can then start to think about how to fill them.

Of course, that can be hard. Decisions rarely belong cleanly with a single person – they touch too many interests, require too many skills. You have to make trade-offs, for example between speed and effectiveness. You may need to merge several governance models.

You’ll also probably need to address some of the common barriers to good governance:

• Fear – People may avoid decisions because they’re scared they’ll be blamed if they get things wrong. If your organisation blames people for every mistake, it almost certainly has lots of decision vacuums.
• Micromanagement – If senior managers make every decision, or if they quickly step in to reverse decisions they disagree with, they rob people of authority. Eventually all decisions get deferred upwards. A long decision backlog is almost inevitable.
• Information hoarding – To make good decisions you need awareness both of what’s happening “on the ground” and of the organisation’s goals and strategic intent. If that information can’t be brought together, you’ll get poor decisions.
• Lack of practice – Decision-making improves with practice. If you don’t give decision-making bodies the chance to build relationships and rehearse their operating procedures (e.g. via simulations), then they’ll probably struggle to make big decisions.
• Perfectionism – Organisations sometimes look for the perfect governance model. That’s an endless search. You have to satisfice, accept a “good enough” model, or you’ll be left with no time to actually make the decisions.

I don’t believe the perfect governance model exists. You can be autocratic or democratic. Centralised or devolved. Self-organising teams or top-down command. Depending on your culture, your skills, your market, they can all work. And they can all fail spectacularly.

What definitely doesn’t work is avoidance. When you avoid governance, the vacuums and standoffs fester. To develop products and systems effectively, you need to make active choices about the governance structures you will use.

The post Vacuums and Standoffs: Concerns for Organisational Governance appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

Presenting at this week’s Retail World Conference and Exhibition, Hollingsworth spoke on the topic of Data-driven pricing and promotions through optimisation science. Through the combination of accurate reporting, data analysis and best practices pricing strategies, City Farmers has been able to implement sweeping changes both in-store and online.

His business specialises in pet and pool supplies for consumers, and began retailing its goods via warehouse-style stores in Perth, growing its footprint throughout the 90s. However, the company is not averse to embracing new technologies and now considers itself to be truly omnichannel. Which turned out to be quite a boon once the team had its “three lightbulb moments” regarding its pricing.

City Farmers’ warehouse-style retail outlet.

Three Lightbulb Moments

“We were reviewing our pricing strategy in mid-2012 when we had three lightbulb moments,” Hollingsworth states. “We first realised that prices decisions and outcomes must be manageable, but they also have to be based on strategy and all of it must be measurable. Previously, we weren’t able to say this was true of our pricing structures.”

Hollingsworth found that pricing decisions were instead being made based on a series of assumptions, traditions or pure gut instinct and realised City Farmers’ methodology in this area had to change. It was for this reason his company contracted Revionics to analyse their data and assist in reforming this element of their business.

Acquiring Technology

Having already made the shift to online, City Farmers isn’t inexperienced with solutions providers, so the partnership formed quickly.

“We began looking for a solution in June 2012 and had signed with Revionics within a month,” Hollingsworth says. “By the end of the year we had begun implementing changes based on the feedback of their analysis.”

As a system, Revionics works on a software-as-a-service (SaaS) model, whereby an interface is provided to the client (City Farmers), which allows them to analyse data at the item or store level and makes pricing and promotion recommendations. Forecast modelling is computed in real-time, so that the result of a single price change can be predicted with a high degree of certainty.

City Farmers was confident that the system could work for them because it had worked for others already. Karen Dutch, Senior VP of Marketing at Revionics highlights the work the company has already done.

“The Revionics system is already producing results for businesses globally,” she says. “In the US, for example, we’ve worked with brands like Family Dollar and eBags to provide scientific insight and recommendations into their promotions and everyday prices. We currently analyse over 15 billion SKUs every week to make our pricing recommendations. Demand models are also rebuilt weekly so that they are fresh and reflect emerging signals, allowing companies like City Farmers to run real-time, ad-hoc ‘what if’ simulations in order to compare and contrast strategy change outcomes before implementing them.”

Price elasticity demonstrates the relationship between price and demand.

The Science Behind Price

Hollingsworth explains that the three key elements to producing optimal prices are science, business rules and configurable strategies. When it comes to rules and strategy, these are generally created by the business itself, based on the findings of the ‘science’ part of the equation.

Usually a business would consider employing a number of analysts to examine historical pricing data and apply scientific processes in order to yield actionable outcomes. In City Farmers’ case, this process was completed with a straightforward transfer of data.

“Through the analysis of our data,” he says, “we now had complete transparency over crucial factors like price elasticity and KVIs.”

Known value items, or KVIs, are products that have a disproportionate impact on consumer price perception. They’re crucial to retailers with a large number of SKUs because they have the ability to drive traffic in-store or online, they also take an ‘anchoring’ position in the shopping basket. However, KVIs are also very sensitive to price changes, as well as local competitive influences.

“Before we began this process we had over 400 KVIs – or what we thought were KVIs,” Hollingsworth says. “We’ve since come to see that in reality, only 89 products are true KVIs and this has significantly changed the way we price a lot of our stock.”

The Results

As City Farmers began to implement the changes suggested by Revionics’ data analysis, an interesting thing occurred, Hollingsworth says.

“Prices weren’t necessarily changing across the board on a regular basis, but we did see regular price updates occurring in both directions. For our customers, this has been seen as a good thing as many of their most popular products have become even better value.”

Rather than increasing profit by simply pushing up the price unilaterally, City Farmers was able to clear more volume by reducing prices in many cases, resulting in higher profits regardless.

Since implementing its new data analysis platform, City Farmers has grown gross profit by several percentage points – but it doesn’t end there.

“This is just the start of our program when it comes to optimisation science,” Hollingsworth explains. “Next we need to consider how the technology can help us improve our promotions, including EDMs, print catalogues and segmented offers. Then we’ll also look at optimising how we replenish stock in a very similar manner.”

The post Price Optimisation Strategies Increase Profits at City Farmers appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

Park joined eBay Korea’s subsidiary Internet Auction Company back in 2002 and has since gone on to lead eBay Korea for the past eight years, developing its businesses into online market leaders. Sharkey, on the other hand, joined eBay’s Sydney team in 2003 and has lead the Australia and New Zealand business since the end of 2008.

“I’ve enjoyed four great years at the helm of eBay Australia & New Zealand Pty Ltd,” Sharkey said. “Having worked almost my entire professional life in Australia and Japan, I am particularly excited about returning to the US to continue to work for eBay.”

Senior Vice President and General Manager of eBay Asia, Jay Lee congratulated both Starkey and Park for their work with eBay, confirming the virtues of the change in leadership.

“Jooman will build on the excellent progress the team is making in defining the new Australian retail landscape,” said Lee. “By successfully partnering with businesses and establishing online retail standards in Korea, Jooman has driven eBay’s Korea businesses to market leadership positions. This experience will help boost Australian ecommerce for the benefit of local businesses and consumers.”

The post Jooman Park to Lead eBay Australia, New Zealand appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

In particular, retail companies need to integrate their systems with those of their supply partners – enhancing the link between various organisations results in increased transparency, efficiency and speed.

In analysing the way various businesses are attempting to accomplish these kinds of improvements, CommerceInMotion.com has produced an infographic that examines key elements and strategies involved.

Could you benefit from greater supply chain visibility?

The Struggle for Inventory Visibility, from CommerceInMotion.com

The post Infographic – Supply Chain Visibility appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

Over the past few years, Australians have witnessed many of their household-name-brands like Myer, David Jones and Harvey Norman scramble to move their in-store offering online with varied degrees of success. These experiences have left others wondering exactly how worthwhile an online sales channel is.

Such is the case for beds and bedroom furniture retailer Bedshed, which recently announced the inclusion of internet-connected digital displays in-store. For a company that has no immediate plans to begin selling product online, it is still forging towards a multichannel future regardless.

Gavin Culmsee, Chief Operating Officer of Bedshed took some time to discuss the company’s strategy and recent developments in greater detail.

Bedshed

Website: www.bedshed.com.au

Launched: First store opened in 1980

Specialty Product: Beds and related furniture

Point of difference: Ongoing focus on providing the best in-store experience while also beginning to connect with online consumers

Web development: Agency-provided

Can you provide a rough overview of Bedshed’s history? 

Bedshed recently notched up its 30th anniversary in franchising, so we’re very much a veteran of the franchising industry. Our origins are in Western Australia, where we opened our first store back in 1980. We started franchising the business two years later and haven’t looked back.

In the early days we were primarily selling waterbeds – the product of the time. In the decades since, we’ve continued to seek out the best bedding and bedroom furniture products from around the world, we have refined our business model and successfully built a network of more than 30 stores.

One of the biggest changes since the early days has been our focus on innovation and investment in new technology. We were the first to introduce the Franchise Calculator (an online tool to help prospective franchisees financially compare different franchise systems) and last year we launched Australian-first technology into two of our stores.

When did the idea of multichannel retail take hold and what have you developed in this direction so far?

We connect with our customers in a number of different ways. Our website is home to a wealth of information on products ranging from mattresses and pillows to bed linen and bedroom suites. Customers can also learn about the latest deals and read blogs on topics from how to make their bed the easiest way and choosing products for children’s bedrooms.

Late last year Bedshed kick-started what is set to become an Australian retail revolution, turning online shopping on its head by bringing the internet in-store. While other retailers are struggling to catch up with the impact e-commerce is having on their business, we looked at how to bring the power of the Internet in- store to improve our customers’ experience.

We have installed touch screen kiosks, which sense and react as customers approach, in two of our stores so far. Customers use the screens to review promotional content, search the online product gallery, add items to their wish list and have a custom PDF brochure created and emailed to them directly from the screen. What it means is those who are shopping alone can have the brochure emailed to others for their input. It leads to a faster purchasing decision.

The interactive kiosks also have a Mattress Assist functionality which lets shoppers browse by brand, mattress size, which room the bed is for, and the reason for the new purchase such as partner disturbance or improvement in health and wellbeing.

Early numbers suggest that around one in 10 customers are making use of this revolutionary technology. It’s all power to the customer.

Gavin Culmsee, COO of Bedshed.

What is Bedshed’s current stance on transacting online?

At this stage there are no plans to transact online. One of the biggest online shopping challenges for the bulky goods sector is the cost of freight and restrictions on customers returning products.

Our customers enjoy the in-store experience. The ‘touch and feel’ aspect of retailing is important to them. When they’re buying a new mattress they want to come in, speak to an expert for advice and test out lots of different beds. Buying a bed is an investment – we spend about a third of our life in bed and so you need to make the right choice. There is no substitute for the highly qualified and specialist advice our in-store teams deliver.

Having said that, we haven’t ruled out the possibility of online sales at some point in the future. Our customers could come in store, do their homework and subsequently purchase online. We are already considering how that would work to ensure our franchisees aren’t disadvantaged.

What differentiates Bedshed from other bedding and furniture stores? Is anything particularly unique?

Our franchisees have an unparalleled focus on service and understanding of their customers’ needs. Their ownership of the business drives them to ensure the service we deliver is better than anywhere else.

Bedshed’s franchisees know their customers well and that’s why they also have a big say in product selection. Our Merchandise Advisory Council, made up of franchisees and senior staff, travels overseas at least twice yearly to visit manufacturers, identify new products and meet with prospective new suppliers. We encourage franchisees to join us to help select products and forge closer relationships with their counterparts.

The shopping experience we offer customers is also very different from the competition. Bedshed recently began rolling out a new store layout which is contemporary, spacious and offers a more comfortable shopping experience. Bedroom settings are located in vignettes with interchangeable backdrops to better showcase our range and great selection of quality accessories.

Part of our revamped store layout includes Australian-first technology which offers customers a new level of freedom, knowledge and convenience. In-store touch screen kiosks have recently been installed at Joondalup in Perth and Moorabbin in Melbourne.

The new store design also features a dedicated kids’ zone decked out in wall-to-wall and floor-to-ceiling purple. It highlights our great range of children’s bedroom furniture and accessories and is a bright and fun space complete with a television to keep the little ones entertained while mum and dad browse.

Our brand personality has a cheeky element to it which ensures we don’t take ourselves too seriously.

An example of Bedshed’s product imagery

Do you have specialty or in-house branded products? How and where are your products generally sourced?

We source our products from a mix of local and international suppliers. We stock a large selection of products from leading brands along with Bedshed’s private label brands Dreamsense and Insignia.

Our Merchandise Advisory Council has its finger on the international pulse with its twice yearly overseas buying trips where we visit suppliers, look at new products and witness the latest trends in bedding and bedroom furniture.

Can you break down your marketing mix for me? What works well for Bedshed and what is yet to be tried?

Our marketing mix primarily comprises advertising, public relations and online. This combination is highly effective in reaching local consumers and our loyal customer base.

How do you develop website content (in-house, outsourced)? Do you have much traction on social media and can you describe the strategy behind this?

Bedshed’s website content is largely generated by our digital agency.

We’re in the process of building a social media presence, and we’re taking the time to get this right. Strategically, we need to build content which is true to Bedshed’s brand and unique personality.

Do you have any plans for the future you’re willing to share with us? Any developments on the horizon?

We have an aggressive east coast expansion program on the horizon and will maintain our big focus on innovation. The Australian-first technology we introduced at our Joondalup store in Perth and Moorabbin in Melbourne is likely to be seen throughout our national store network in the not-too-distant future. Watch this space.

The post Bedshed: Multichannel Retail Without Selling Online appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

We talk so much about apps, campaigns, sites, platforms, etc, that we forget how intangible they are. Like icebergs, you see only the small percentage on the surface.  Deeper down, there’s a lot going on. Code, libraries, schema, scripts, layer upon layer of infrastructure – all invisible.

This hurts us when we’re creating this stuff. It’s hard to get a handle on how our development teams are really doing when so much of what they do creates intangible outputs. It’s not like building a bridge: you can’t see the new beams as they go up every day.

It hurts us in operations too. Web teams create a lot of stuff beneath the shiny surface of their sites. They spend a lot of time tweaking things that people only notice subconsciously – fonts, tone of voice, small shifts in layout. These all drive perceived quality, but many people don’t notice them explicitly so can’t relate to the effort that goes into them.

Such invisibility creates a dynamic that I see a lot. A spiral of death builds up:

a)   People can’t see what the team is doing.

b)   This lowers their confidence that the team is operating effectively. (Confidence may be low to begin with. Invisibility almost always damages it further.)

c)   So they ask for status meetings and reports, to try to get a handle on things.

d)   They also add more work to the team’s queue. (If you’re not confident about what the team will deliver, then you might as well err on the safe side and put more requirements into the pot.)

e)   Both (c) and (d) create more work for the team.  They have to write status reports. They have to manage a backlog of requests, re-prioritising and adjusting as circumstances change. Larger bundles of requirements tend to contain more duplication and conflicts, all of which need to be managed. And so on.

f)    This in turn creates delays in the system. Requests take longer to handle. This makes them more vulnerable to external change, generating yet more work as people redo their analysis and rework half-finished products.

g)   So the team’s capacity is diverted onto reporting, backlog management, rework and suchlike. Their pace of delivery declines. This lowers people’s confidence further.

A classic spiral of decline – lack of confidence leads to actions that further degrade confidence. I see this regularly across my clients.

How do you break this spiral?

Going around saying “Trust Us” isn’t enough. You need to act to rebuild confidence.

I’d take some clues from the work going on in the Kanban community. Three of the things it emphasizes – making work visible, limiting work-in-progress, continuous improvement – can do a lot to break the spiral of decline.

Visible kanban boards, where post-it notes represent the tasks we’re working on, help people understand just how much is going on. They get a sense of progress as tasks shift from “Ready” to “Doing” to “Done”.  When things are so visible, it’s easier to keep track of dependencies, easier to spot duplicates and conflicts. We can eliminate status reports: status is always visible on the board.

An example of a simple Kanban board.

Limiting Work-in-Progress (WIP) ups the pace of delivery. When we have too much on our plates, we fragment our resources. We waste effort on context switches.  Focus on one thing and you deliver it more quickly. You get faster feedback, making it easier to ensure you’re producing the right stuff. Juggling too many balls exacerbates many of the problems of the spiral of death. Do less in order to do more.

And then there’s continuous improvement. You can see the flow of work across the kanban board. When it’s blocked, the problem is obvious. You can start to analyse the blockage and act to remove the cause. My experience is that teams take this message on board when the workflow is so visible. Years of Total Quality and suchlike had little effect, but a bunch of post-its on a board facilitates real change.

It’s ironic that we need physical post-its to manage intangible, digital stuff. Yet their tangibility and ease of movement makes them very powerful. Making the work visible does make it easier to manage.

The post Overcoming the ‘Spiral of Invisibility’ with Operational Transparency appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

This is of particular concern for British retailers, as analysts estimate that the rate of return can be anywhere between 25 percent and 50 percent of all products sold online. Inasmuch as the holiday period put a strain on the UK delivery system, the ensuing onslaught of returns must also continue to be a burden.

The reasons for these high rates of return are probably more than familiar to our readership; where online consumers have quickly becomes accustomed to ‘free shipping’ and ‘free returns’, they also get used to purchasing three or more sizes of the one item and return those that don’t fit. In the case of expensive women’s dresses, a garment might be purchased online and worn once on delivery before being returned the following day.

According to Information Week, the issue isn’t constrained to the UK alone. Germans apparently sustain a rate of return three times higher than that of the French or Spanish, prompting retailers to develop expensive technologies in an attempt to deal with the situation.

Pundits point towards the use of  high-quality product imagery, detailed information, big data and even augmented reality technologies as the way forward in preventing excessive returns. But once consumers have the habit of over-purchasing, are these measures really enough to stem the tide?

It seems likely that online channels will always suffer a higher rate of return that traditional stores, and so online retailers will have to consider factoring this into their pricing structure – an unfortunate drawback for the entire channel.

What are your thoughts? Is there another way to solve the problem of over-purchasing and increasing return rates? Have your say in the comments section below this article.

The post Return to Sender: UK Online Retailers Battle Reverse Logistics appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

Of course, doing something because the manual says you must isn’t best practice at all. It’s bureaucracy by another name. And it isn’t what the originators of these standards intended.

So what’s going on?

I think most organisations are struggling with rapid technological change. Cloud changes the way they think about infrastructure and applications. Big Data changes their approach to data. The growth of tablets and smartphones changes the way they manage devices. Mobile adds a whole new layer to the stack. It’s a perfect storm – the typical organisation faces big changes across their entire technology stack.

Faced with this change, an organisation has two options. It can enhance its ability to change, or it can try to control the pace of change. The former is tough – you have to accept uncertainty, unlearn skills that were valuable once but are irrelevant now, build new relationships. This challenges people’s self-image as confident, knowledgeable, well-connected professionals.

On the other hand, controlling change can look pretty attractive. We all like to feel in control: it’s a lot more comfortable that being buffeted by outside forces. Our organisational mythologies reinforce this – they praise people who take control, denigrate those who merely react. Imposing standards that reduce variability and temper the forces for change can be very tempting.

The problem comes when controlling change degenerates into creating stasis. When the marketplace, consumer attitudes, technology capabilities and cost structures, etc, are all changing rapidly, such stasis is deadly. Building the ability to respond rapidly to change is the only viable strategy.

How do we build this ability?  Here’s my take on where most organisations should be going:

• Offload commodity services. Many organisations are weighed down by commodity infrastructure and applications. They consume a lot of time and resources without adding any competitive advantage. Offload them to specialist service providers, who can exploit economies of scale and skills, and you free up people to deal with change.

• Automate where appropriate. Likewise, most organisations could free up a lot of capacity by automating standard administrative processes. The key here is to focus on administrative processes. Trying to automate activities that require a human touch (e.g. customer support) or are inherently variable (e.g. research and development) destroys value.

• Create responsive, cross-functional teams. Put multi-skilled teams at the frontline, where they can work together and handle situations as they arise. You might be able to improve some notional concept of efficiency by putting people into central “resource pools”, but you’ll do so at the expense of creating coordination overhead and delay. In a rapidly changing world, efficiency is a mirage – you have to focus on finding the right thing to do.  Otherwise you end up efficiently doing the wrong thing.

• Reduce Work-in-Progress. Most organisations try to do too much. They kick off too many projects, load people with too many tasks. Again, this creates overhead and delay. Projects deliver value later because they’re staffed with part-timers. People waste energy on context switching and status reporting. Do a small number of things at once, and you’ll complete each of them more rapidly.

• Reduce communication overheads. Co-locate teams. Use collaboration tools and social media. Don’t over-constrain the way people use these tools – let them evolve their own toolsets from the basic building blocks. Give them support to do this.

• Free up capacity to experiment. Google gives its engineers 20 percent of their time to work on their own projects. This doesn’t just generate new product ideas: it creates internal capacity to respond rapidly to other pressures. Likewise, you need to create some capacity to monitor trends, identify new opportunities, try out new ideas.

Sometimes best practice entails accepting you don’t know exactly where things are going, being flexible, and adapting your response to the situation at hand. Defined ‘best practices’ such as ITIL and the ISO standards are valuable – they help you manage commodity service providers and automatable processes, for example – but they become counterproductive when they crowd out the ability to think and respond.

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Today, matters are even worse. With the emergence of the internet, ever-growing volumes of opinion-based ‘information’ available online completely obfuscate peer-reviewed, factual data. The only positive consequence of this avalanche of pseudo-information is that organisations smart enough to embrace TQM can enjoy even bigger competitive gap, as many of their competitors make decisions based on somebody else’s opinions posted on the internet.

Extraordinary results

US management consultants, led by W. Edwards Deming, first laid down their theories of fact and statistics-based business management methodology in the 1950s. Deming himself taught top tier management in Japan how to improve business processes and when the Japanese diligently worked with Deming’s Management Method (also known as TQM), their gross domestic product (GDP) increased 10 fold between 1970 and 1990. Prior to this, Japanese economy was a basket case, and afterwards it has remained flat.

Imagine what would happen in Australia if our GDP grew from $1,000 billion to $10,000 billion by 2030. But at the current rate of growth we will only get to $1,700 billion; the gap caused by not going for the little ‘extra’ and giving up on the extraordinary, so we can keep our ordinary ways, will be $8 trillion per year.

How to achieve the extraordinary

The power of TQM comes from moving management practice beyond common sense – TQM uses facts, process measurement and statistical assessments, rather than personal opinions, experience-based practices, or arbitrarily set numerical targets. It makes clear distinction between processes and events – it uses different protocols for systemic issues and for incidents. But, most importantly, TQM is not a one-off project – it’s a different management paradigm, an unwavering business-wide dedication to long-term success via structured thinking, continuous improvement and focus on customer satisfaction.

I have the view that one of the key reasons why TQM has not become more widespread in Australian business is that it doesn’t produce instant results typically expected in western culture. You can’t ‘test-drive’ TQM and you can’t expect instant outcomes. With share market-driven businesses, geared around fast growth and short-term performance metrics, TQM doesn’t look like an attractive proposition. Frequent changes at executive level prevent TQM from being deployed too.

Why common sense is no longer sufficient

Stories in the media continually confirm that the world is composed of three sets of people – those who require detailed guidance, those who have common sense and can guide themselves and others, and those who actually understand how the real world operates and achieve remarkable results.  I would argue that the last category comprises no more than one or two percent of the population.

Common sense is obviously important, but not everything can be analysed according to cause-and-effect principle. In the real world not all causes can be identified and some effects are unexpected. Those who understand this are more effective in business and in life. In my assessment one of the reasons why so few people think like this is our culture. Shaped by our 19^th century-style education system (developed in Bismarck’s Germany), it is still aimed at creating obedient employees rather than open-minded entrepreneurs. I don’t see any signs of change in this space any time soon.

This is why those who understand and use TQM can gain a distinct competitive advantage.  As it boosted Japan, it can boost your enterprise too. True, a new way of thinking, time, effort and discipline are needed for TQM implementation, but it can result in better employee relationships, improved customer experiences and more robust business decisions. If business operators are prepared to go the extra mile and commit the resources and management focus, TQM will most certainly work for them.

How can you start on this path? Simple: I encourage everyone to get well versed with the original works written by Deming – real eye openers, but don’t expect an easy read. It is a new paradigm.

The post Total Quality Management: Why it’s even more relevant today than in 1950 appeared first on Power Retail - Australia's News and Information Resource for the Online and Multichannel Retail Community.

However, when going online we frequently overlook this vital step, or only address it after the fact. But measuring online performance can often be easier than offline. The key is to think about how you will measure your operation from the very beginning as you are building your online presence, then design this into your overall project.

Here are some of the basic principles to keep in mind.

The Online World is All About Numbers

At the foundation, every type of online information whether text, audio, video, calendars, phone calls, etc., is in digital form, a series of 0s and 1s.  In addition we all access the online world through some type of digital device, such as a mobile phone, kiosk or tablet, which has a small computer processor built in. Finally, because numbers are so prevalent throughout the online world, digital information is easy to capture and record for storage and analysis.

All this means that we have access to a wide range of data about the online world and how it performs. In fact, data collection is so easy online that we frequently have too much, so finding the best information to make business decisions can be challenging.

Measuring online data is all about understanding numbers.

The Right Data Helps Business Decisions

Thanks to technology, an online business has access to many different metrics to measure performance. Often there is too much information, and it becomes difficult to decide what is really necessary and helpful. There are three types of metrics which can help you make business decisions.

1. Backward-Looking Metrics Report Historical Progress: Many types of information are backward-looking, they report on what a business has done, and show progress over time. Common financial metrics such as balance sheets and profit-and-loss statements fall into this category. They are widely accepted by the financial community and their calculation is well understood. However, historical metrics do not indicate what is going to happen in the future, they only report on the past.
2. Forward-Looking Metrics Can Predict: Some metrics can give insight into how a business will perform in the future and provide advance warning of problems that may be coming. Many of these metrics are most useful when tracked over time and trends up or down are evaluated. For example, an increase in warranty claims and customer complaints can indicate problems with a product and future decreases in sales unless corrected. Frequently forward-looking metrics do not have formal methods for data collection, calculation, and analysis, so each business will have to develop its own methods.
3. Behavioural Metrics Anticipate Customer Actions: Behavioural metrics look at patterns of behaviour in groups of people who share similar characteristics. These metrics are tracked across both demographics and behaviour, and they give insight on what people will probably do when faced with a certain set of circumstances. Behavioural metrics require high-quality data and, most importantly, the ability to track individuals across different channels using a specific identification method such as a login, device ID or credit card number. Behavioural metrics is particularly useful for predicting what actions people will take if you present them with a specific offering.

The Right Data for the Right Audience

Running a business requires having good information in order to make the best business decisions. Too often we forget that different groups within an organization require different types of information. Senior management and boards of directors will want high-level information in order to plan the overall business strategy. Giving senior managers the latest report from Google Analytics probably will raise more questions than it solves.

Beware of drowning yourself and staff in reporting – it’s not useful if it’s increasing everyone’s workload.

Middle management will want operational information that helps them run their respective areas of the business. Each department, such as sales, production and human resources, will need data that relates to their particular responsibilities. Softer metrics such as brand awareness or email opening rates will be useful here.

Staff will require the raw data, since they will have to take action on individual elements such as a delinquent customer account. In addition they are often responsible for preparing the reports that go to middle and senior management.

Watch out for information overload at all levels, as it is easy to generate voluminous reports which have little practical use. Carefully select the information and reports that you give to each group within your company.

Use Metrics which Focus on Business Results

Finally, make sure everything you measure will help you run the business better. There is no use wasting time and effort to measure something that has no value to anyone, even if this is “the way it has always been done.” Focusing on the right metrics offers two benefits: (1) information to help make better business decisions and (2) justification for the resources spent collecting and analyzing the data.

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